State-owned Krungthai Bank is the second financial institution to follow a Bank of Thailand ‘request’ to stop cryptocurrency trades.
Krungthai Bank has become the second financial institution after the Bangkok Bank to terminate transactions involving cryptocurrencies trading with Thai Digital Asset Exchange (TDAX), following a Finance Ministry order.
As chairman of Krungthai Bank, Somchai Sujjapongse, permanent secretary of the Finance Ministry, ordered the state-owned financial institution on Monday to halt any transactions related to cryptocurrencies with TDAX through the bank’s accounts.
The move followed a Bank of Thailand request that financial institutions cooperate by refraining from making or being involved in cryptocurrency transactions, as the regulatory framework supervising digital currencies remains unclear, said Mr Somchai.
The Securities and Exchange Commission (SEC) is in the process of issuing the regulatory framework and it is expected that the SEC will have a clear mandate for such regulations by the end of this month, he said.
The SEC’s regulatory framework on supervising an initial coin offering (ICO) could specify that businesses that intend to be involved with this digital asset have to seek an operating licence from the market regulator, said Mr Somchai.
The central bank is seeking the cooperation of financial institutions to avoid investing or trading in digital tokens, refrain from providing exchange channels for customers trading in cryptocurrencies, and refrain from creating platforms for customers to make cryptocurrency transactions.
Bangkok Bank on Friday became the first domestic financial institution to halt transactions involving cryptocurrencies with TDAX on grounds that TDAX’s business operations were not in accordance with its business purpose as registered with the Commerce Ministry.
TDAX, a privately owned Thai exchange for the trading of digital assets, registered its business with the Commerce Ministry’s Business Development Department as a digital currency business upon receiving an operating licence, said TDAX founder and chief executive Poramin Insom.
Although TDAX’s account with Krungthai Bank is not operational, Mr Poramin said he has not received any contact from the bank on this matter.
TDAX has bank accounts with four financial institutions: Bangkok Bank, Krungthai Bank, Kasikornbank, and Siam Commercial Bank.
Meanwhile, bank accounts linked to another major domestic exchange for digital assets, bx.in.th (BX), which is operated by Bitcoin Co Ltd, remain operational, said Yuthavithi Rootwararit, chief executive and founder at Crypto Trading Co Ltd.
“It seems like the government is pointing to TDAX as a market that operates an ICO portal, which the government is concerned with, while BX does not operate such portals. But the government may not know that BX’s trading volume and value are more than ten times larger than those of TDAX,” said Mr Yuthavithi.
“The volume and value of trading on some cryptocurrency exchanges are about half of the Stock Exchange of Thailand’s daily trading value.”
He is not worried about banks terminating accounts linked to these digital exchanges because cryptocurrencies can be traded globally and there are many ways to withdraw money converted from cryptocurrencies.
A source from BX said Bangkok Bank has already terminated the exchange’s account, but did not reveal whether the termination occurred on the same day as TDAX’s termination.
The latest development was widely criticised by cryptocurrency investors on the exchange’s chat bot, Facebook pages and investment websites.
Some investors have encouraged others to sell digital currencies and withdraw money via banks before their cryptocurrency investments are suspended by the banks.
Others said the Finance Ministry’s move is a scheme to make the value of cryptocurrencies to nosedive.
Some investors have even offered to buy cryptocurrencies, expecting panic-selling to cause prices to plummet because there are many exchanges and methods to withdraw money converted from digital assets.
The latest development is considered a hindrance to foreign startups hoping to offer ICOs in Thailand.
They could opt to relocate overseas, with Singapore expected to benefit the most since the city-state’s venture capital industry is vigorous, said Santitarn Sathirathai, an adviser at ICORA.
ICORA chief executive and co-founder Karndee Leopairote said Krungthai Bank’s termination of TDAX’s bank account could be temporary as the bank may be awaiting the SEC’s ICO regulations.
“Too many limitations placed on retail investors would result in major investors determining the value of ICO transactions,” said Mr Karndee.