Bank of Thailand Green-Lights Financial Companies for Crypto Activities – Bitcoin News
Thailand’s central bank has announced the rules under which financial institutions, including commercial banks, and their subsidiaries can engage in cryptocurrency activities. They include securities, asset management, and insurance firms. This follows the country’s crypto regulatory framework that went into effect last month.
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New Circular, New Rules
Thailand’s central bank, the Bank of Thailand (BOT), issued a circular dated August 1 to all financial institutions in the country, informing them of its new crypto policies.
Citing that the country now has a regulatory framework for cryptocurrencies and initial coin offerings (ICO), the BOT canceled its previous circular issued in February. At that time, the central bank asked financial institutions to refrain from getting involved in certain types of crypto activities.
In its new circular, the Bank of Thailand outlines the conditions under which financial institutions and their subsidiaries can now engage in activities involving cryptocurrencies and digital tokens.
The rules can be divided into two broad categories: those that apply to financial institutions and those that apply to their subsidiaries.
Rules for Subsidiaries
Within a financial institution’s group of companies, there are usually subsidiaries offering financial products and services such as brokerage, asset management, insurance, and life insurance. These companies have their own regulatory bodies. For example, brokerage firms comply with the Thai Securities and Exchange Commission (SEC) whereas insurance firms comply with the Thai Office of Insurance Commission (OIC).
The BOT says these companies are now permitted to engage in crypto businesses including issuing digital tokens and investing in cryptocurrencies, providing they follow the rules set by their respective regulators.
New subsidiaries wanting to engage in crypto activities, however, must apply for approval from the BOT through their parent companies. They will be considered on a case-by-case basis.
The parent companies must be responsible for overseeing and managing the overall risks associated with the proposed crypto activities for the whole group and at individual subsidiaries. The central bank explains that they must also ensure that the subsidiaries follow regulatory guidelines including anti-money laundering (AML), combating the financing of terrorism (CFT), IT security, and consumer protection.
Rules for Financial Institutions
The rules for financial institutions, which include commercial banks, are much more strict.
Citing that the crypto industry is still young and therefore difficult to clearly assess and manage associated risks, the BOT believes that customer confidence and the country’s financial system as a whole could be affected by financial institutions holding cryptocurrencies. It then proceeded to list four areas that financial institutions must not engage in.
Firstly, they cannot issue digital tokens or provide any service selling them. Secondly, they cannot invest in digital assets which includes “both tokens and cryptocurrencies,” the BOT specifies.
They also must not engage in crypto businesses, including as exchanges, brokers, or dealers. Lastly, they cannot solicit or give advice on crypto investments to anyone that is not an institutional or accredited investor as defined by the SEC.
However, according to Krungthep Turakij publication, financial institutions can issue or invest in cryptocurrencies for the purpose of developing or improving their services to customers by applying for the regulatory sandbox.
What do you think of the Bank of Thailand’s latest crypto rules? Let us know in the comments section below.
Images courtesy of Shutterstock and Bank of Thailand.
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