18 Comments

Summary:

A Thai Bitcoin exchange has suspended operations after failing to win a license from the country’s central bank. However, the outfit’s conclusion — that Bitcoin is illegal in Thailand — smells funny.

Bitcoin
photo: Guardian/Guy Grandjean, James Ball

A Bitcoin exchange in Thailand has suspended its services because, it claims, it has been informed by the country’s central bank that the crypto-currency is illegal. However, something about this now widely spread-around story just doesn’t sound right to me.

First, let’s look at what Bitcoin Co. Ltd., which tried to get a money exchange license from the Bank of Thailand, said in its shutdown notice:

“At the conclusion of the meeting senior members of the Foreign Exchange Administration and Policy Department advised that due to lack of existing applicable laws, capital controls and the fact that Bitcoin straddles multiple financial facets the following Bitcoin activities are illegal in Thailand:

  • Buying Bitcoins
  • Selling Bitcoins
  • Buying any goods or services in exchange for Bitcoins
  • Selling any goods or services for Bitcoins
  • Sending Bitcoins to anyone located outside of Thailand
  • Receiving Bitcoins from anyone located outside of Thailand

“Based on such a broad and encompassing advisement, Bitcoin Co. Ltd. therefore has no choice but to suspend operations until such as time that the laws in Thailand are updated to account for the existance [sic] of Bitcoin. The Bank of Thailand has said they will further consider the issue, but did not give any specific timeline.”

I have tried to contact the Bank of Thailand for comment on these claims, so far without success. So, bearing in mind that I’m not a lawyer (and definitely not an expert in Thai law), here’s what I find suspicious about this story.

First off, the Thailand’s central bank doesn’t set laws – the country has a Ministry of Finance to do that. What it does do is regulate financial institutions and, for one reason or another, it seems to have decided that Bitcoin Co. Ltd. was not up to the task.

This may well be because the Bank of Thailand doesn’t feel equipped to start regulating Bitcoin operations, but it does not mean Bitcoin is illegal, as such. The core idea, described in the message above, is that, in Thailand, something for which there is no law is by its nature illegal. That is not generally how law works – there’s probably no law in Thailand against covering a houseplant in butter, so that would make it illegal? I suspect not.

What is more, even if Bitcoin were illegal in Thailand – which I doubt – there would be no way of enforcing that. The use of Bitcoin is inherently anonymous, so there would be no way of detecting let alone stopping people who use it to buy and sell things. The same goes for sending or receiving them on a cross-border basis.

The only part of the Bitcoin ecosystem that can be effectively regulated today is, as the U.S. is ably demonstrating, the buying and selling of Bitcoins themselves. This is the part that licensing issues can shut down – there’s a reason for that: such trade involves “real” currency, in this case the Thai baht. And it’s the Bank of Thailand’s job to manage the baht.

It may well be that the Bank of Thailand doesn’t understand Bitcoin yet, or is even outright hostile towards it, but that almost certainly doesn’t mean Thailand has banned it. It’s far more likely that this is a case of officials erring on the side of caution and/or not being convinced by whatever Bitcoin Co. Ltd. had to say in its license application. At most, this reflects a prohibition on one company running a Bitcoin business — rather than a full-blown national ban.

  1. What is Bitcoin? Exactly, they ain’t the Dollar Bill yet y ‘all.

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    1. Fill F. Fill Tuesday, July 30, 2013

      Like the dollar, it is backed by nothing but faith. It used to be you could exchange your USDs for gold. In the 30′s FDR took the USD off the gold standard (he even made it illegal to own gold for use as barter). Your dollar only has value because you have faith that tomorrow you can spend it and get about the same value from it.

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      1. Bitcoin backed by faith in math, cryptography, and game theory. Gold is backed by physics. Dollars are backed by faith in politicians and central bankers. I know which ones I prefer.

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        1. Marcus Tallhamn Tuesday, July 30, 2013

          Math > Physics > Engineering > Politics no? :)

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      2. Remember that it costs money to mine Gold. It also costs money to mine Bitcoin. Bitcoin is backed by the people wanting to use it, just like the USD or Euro, both of which are supported by your hard work and Govt manipulation

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  2. As per any national bank, they administer laws, if you read Thailands currency laws it would not be difficult to deem bitcoin, not a currency, if you chose to so determine.

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    1. Fill F. Fill Tuesday, July 30, 2013

      @Rich It already isn’t a currency. There is no government backing. It is a barter medium. A declaration by any government on what Bitcoin is or what its worth is would be meaningless.

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  3. Well done a David! you’re quite right!

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  4. 1st reasoned argument i have read about this whole messy situation.

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  5. Do a whois lookup on the site ‘bitcoin.co.th’… its been around since June, this year… they must be a serious business since they registered the domain for not 1, but 2 whole years! (kidding)

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  6. Bitcoin is not inherently anonymous. It allows both anonymity and transparency. It depends on how you use it. An average person should not consider his use of Bitcoin anonymous.

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  7. When did vague observations of an even more vague blog post become journalism?

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  8. Since social media took over journalism

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  9. Fill F. Fill Tuesday, July 30, 2013

    I don’t believe they banned Bitcoin. The exchange’s press release might have lost a little clarity in translation. I believe in their context, existing laws don’t allow a commercial *exchange* to buy/sell/exchange Bitcoins. That’s different from saying citizens can’t use it as barter. A highly cited article at Parity News might also be partly to blame as the author seems to imply that Bitcoins can’t be traded without an exchange.

    Anyways, banning virtual currency would be a huge upset to the economy. It would be banning store credit, airline miles, gift certificates, etc.

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