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.