Bank of Thailand seeks feedback on draft rules for baht stablecoins
The Bank of Thailand has released a consultation paper seeking public feedback on proposed regulations for baht-denominated stablecoins, setting out rules that would require issuers to back every coin fully with baht at a one-to-one ratio. The central bank said backing assets would be held in bank deposits in the initial phase, redeemable for baht under specified conditions, with redemption available within one business day.
Under the proposed rules, issuers would be prohibited from paying interest or offering returns, directly or indirectly, based on the duration or value of the stablecoin. The consultation paper said the restriction aims to ensure that baht stablecoins function as a means of payment rather than a savings or investment product, and that the digital payment tool's role should be clearly distinguished from financial products that offer returns on holdings.
The central bank also proposed designating baht stablecoin issuers and wallet service providers as payment service businesses subject to the Bank of Thailand's supervision, with operators required to obtain licences before commencing operations. Issuers and wallet providers would be required to implement measures to curb money laundering and other financial crimes, including know-your-customer and know-your-merchant procedures, alongside systems to monitor suspicious transactions, mitigate cyber threats and protect users.
To prevent excessive fragmentation of stablecoins, which the central bank said could create liquidity problems and undermine their effectiveness as a means of payment, it is also considering limiting the number of licensed issuers. Over the longer term, the central bank may consider allowing issuers to hold other high-quality liquid assets, such as short-term government bonds, as part of their reserve backing.
According to the paper, the central bank believes baht stablecoins could improve transaction efficiency, particularly in applications involving distributed ledger technology. Potential use cases include digital asset settlement and automated transactions in which payments are programmed to meet specific conditions, such as releasing funds only after a buyer confirms receipt of goods. The central bank said it does not expect emerging financial technologies to replace existing payment systems entirely, however, and that the initiative could also offer users greater convenience by reducing transaction fees and processing times. It said the development of baht stablecoins is intended to address specific use cases and limitations in existing payment systems that may not adequately serve, and that Thailand already has an efficient, low-cost retail payment infrastructure that broadly meets the needs of economic activity.
