Crypto Regulation in Thailand
March 30, 2018
Cryptocurrencies have been around for quite some time, but it was only in 2017 where they made their mark. Bitcoin, arguably the most well known cryptocurrency, gained traction and worldwide attention as the price climbed from a mere $900 to over $19,000 in late 2017. This historic price run even caught the attention of Wall Street analysts, and sent the world into a Bitcoin frenzy.
The spike in popularity of cryptocurrencies have prompted governments to regulate, or even prohibit cryptocurrency transactions. Many fear that cryptocurrencies could decentralise their economies and cause a loss of economic power. In addition, the unique properties of cryptocurrencies pave the way for money laundering, fraud, and tax evasion.
All cryptocurrency transactions are anonymous, since transactions are tied to an address instead of a real life identity. Transactions are also virtually instantaneous and irreversible. These properties are a concern for regulatory bodies and consumers, since the general public would be more susceptible to scams, and unscrupulous individuals may take advantage of the anonymity to perform illegal financial acts.
In an effort to protect potential investors and the economy, Thailand has drafted two new laws regulating “digital assets”, which will be regulated by the Securities and Exchange Commision (SEC). Prior to this, the Bank of Thailand banned all financial institutions in the country from engaging in cryptocurrency activities, and restated that “cryptocurrencies are not legal tender in Thailand”. Despite that, Finance Minister Apisak Tantiworawong stated that the Thai government will not ban cryptocurrency trading, and released information regarding the two new laws.
The first law, titled the “Act on Digital Business”, requires all transaction details to be reported to the Anti Money Laundering Office, or the SEC if necessary. The second law is a revision of the Revenue Code to introduce taxation on cryptocurrencies. The withholding tax is expected to be 15%, on top of the income tax levied on investment gains from cryptocurrencies and 7% VAT.
While these two laws have not been ratified, avid Bitcoin miner Ohm Poompernsuwan (10) supports the government’s push to regulate cryptocurrencies. “Since it is not possible to track current transactions in crypto, one could easily perform illegal activities through crypto. The first act is fair, and will definitely make cryptocurrency trading safer for everyone,” remarks Ohm. “All trading exchanges in Thailand already require proof of identity, so (the lack of) anonymity isn’t really an issue for us.”
However, Ohm disagrees with the excess 15% crypto tax on investment gains, since the tax, when calculated on top of the income tax, would prevent miners from making profit. Ohm invests around 110k every month on mining Bitcoin, and the proposed tax does not take into account the costs involved in maintaining the systems needed to mine cryptocurrencies. While Ohm’s monthly profit from mining was not disclosed, he states: “The proposed tax will definitely cut into my profit margin, and make mining Bitcoin less appealing to potential miners.” When asked if the proposed tax will affect his mining operations, Ohm stated that he will definitely continue mining, but with reservations.
Are you currently investing or were you planning to invest in Bitcoin and other cryptocurrencies in Thailand? Will these new regulations affect your decisions regarding your investments? Share your ideas with us in the comments below.