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Bank of Thailand issues warning against baht-backed stablecoin

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The Bank of Thailand (BOT) recently issued a warning against the use of Thai baht-denominated stablecoins, labelling them a threat to the stability of the national currency system.

Based on the report of Bangkok Post last March 18, the central bank stated that Thai Baht Digital (THT) has no legal assurances or protection and that these digital transactions could possibly lead to cyber theft or money laundering.

In support of this statement, BOT assistant governor of the legal group Pruettipong Srimachand cited a sixty-year-old law that proves stablecoins are illegal:

‘The creation, issuance, usage or circulation of any material or token for money is a violation of Section 9 of the Currency Act 1958,’ he said during the press release.

In response to these complaints, Terraform Labs head Do Kwon told Coindesk in a Twitter direct message that was released to the public, Terra will not change anything from their platform nor add something to it.

‘I think it’s a very interesting development and quite amused we were able to catch the attention of a central bank,’ Kwon said. ‘Great free public relations, right?’

In addition, when asked by an anonymous user on whether Kwon believed the central bank could ‘hurt’ the THT ecosystem within Terra, Kwon laughed it off and rejected this claim.

The central bank reported that THT poses a threat to Thai baht if it ever attempts to compete with the central bank-issued currency. BOT assistant governor of the legal group stated:

‘Although THT is not used as a medium of exchange, it could cause fragmentation of the Thai currency system should THT or other stablecoins come to replace, substitute or compete with baht issued by the central bank. Such usage would ultimately affect the general public’s confidence in the stability of the national currency system, which is the cornerstone of all economic activities.’

BOT set forth that this policy is in line with guidelines in countries such as the United Kingdom, Singapore, and Japan. Moreover, the central bank will continue to monitor developments of new technologies and adopt policies that support the economy and can maintain financial system stability.

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