Cryptocurrency enthusiasts in Thailand and abroad are celebrating after former Prime Minister Thaksin Shinawatra proposed using the resort island of Phuket as a Bitcoin sandbox for tourism, with the goal of encouraging digital currency holders to spend in the country.
Thaksin, the de facto leader of the Pheu Thai Party, stated that other countries in the region are eager to talk with Thailand about cryptocurrency, seeing it as a way to bring more money into the economy.
He claimed Thailand is better prepared than other Southeast Asian countries to move forward with cryptocurrency, particularly after US President Donald Trump announced crypto-friendly policies. Stablecoin is a currency that is backed by assets like gold or government bonds, making it less risky than other digital assets.
A cryptocurrency sandbox is expected to be launched in October in collaboration with the private sector. However, challenges remain, as the Bank of Thailand does not yet accept Bitcoin or other cryptocurrencies as payment. Thailand’s Securities and Exchange Commission (SEC) regulates cryptocurrency exchanges.
The idea behind a crypto sandbox in tourist destinations like Phuket is to allow Bitcoin and other cryptocurrencies to be used instead of traditional currencies, as some foreign nationals may spend several million baht on condos or houses.
The Safety of Cryptocurrency
The initiative allows foreigners to spend large sums of money without needing to carry large amounts of cash. The use of traceable cryptocurrencies may aid in the capture of previously untraceable funds brought into the country by foreigners.
According to Nirun Fuwattananukul, CEO of cryptocurrency exchange Gulf Binance, the Phuket crypto sandbox has the potential to elevate Thailand’s position on the global stage.
“Given Thailand’s heavy reliance on tourism, introducing a crypto-friendly environment in a high-profile destination such as Phuket could attract not only tourists but also digital nomads, crypto investors, and innovative startups to the region,” said Mr Singh.
According to Mr Nirun, this aligns with Thailand’s strategic strengths and strengthens the country’s image as a forward-thinking, innovative nation that embraces emerging trends.
He added that the sandbox model provides a controlled environment for managing the risks associated with cryptocurrency.
“As the baht is not a free-floating currency, this approach allows regulatory authorities such as the central bank to monitor progress, evaluate benefits, and mitigate potential challenges while ensuring financial stability,” Mr Nirun explained.
According to him, the initiative should increase trading volume and drive an ecosystem with new ancillary products and services based on blockchain technology. He believes that the sandbox will legitimise Bitcoin and cryptocurrencies, paving the way for greater adoption and innovation in the country.
Global Digital Asset Ecosystem
This initiative could serve as a model for similar projects across the country, propelling Thailand to the forefront of the global digital asset ecosystem. Mr Nirun stated that the primary challenge is the lack of an established legal framework to govern such a project.
“The government will need to develop new regulations, policies and legal structures, while defining the roles and responsibilities of various authorities involved in overseeing the sandbox,” according to the Bangkok Post.
“Managing risks will be critical, as a tailored regulatory framework must be designed specifically for the sandbox, striking the appropriate balance between risk control and innovation. As this is a new initiative in the country, technical infrastructure is also critical.”
Udomsak Rakwongwan, co-founder of FWX, a decentralized derivatives platform, stated that many merchants have been hesitant to accept Bitcoin or other cryptocurrencies because they are difficult to record in their accounts and must find ways to convert them into cash.
Another issue is the extreme volatility of the Bitcoin price. Even stablecoins, which are less volatile than Bitcoin, are subject to exchange rate fluctuations, according to Mr Udomsak, a lecturer in Kasetsart University’s Department of Mathematics.
“Efforts to accept cryptocurrencies as a form of payment for general retail purchases have been ongoing for a long time. “Regulators may need to revisit these discussions,” he stated.
Digital Pay Solutions
Pawoot Pongvitayapanu, CEO of Pay Solutions, a digital payment gateway provider, stated that many companies attempted to offer crypto payment options, but those efforts were halted due to legal concerns about currency regulations that could conflict with the recognition of cryptocurrencies as a form of payment.
Over 100 countries have designated specific cities for cryptocurrency use, including the United States, Switzerland, Argentina, and the United Arab Emirates.
Jomkwan Kongsakul, deputy secretary-general of the SEC, stated that the regulator recognizes the benefits of distributed ledger technology (DLT) and digital currencies in assisting the capital market in meeting the SEC’s goal of increasing financial inclusion and accessibility.
“We are monitoring the development of digital assets to drive the digital economy and appropriately protect investors’ benefits,” according to her.
Ms Jomkwan stated that the central bank has launched the Programmable Payment Sandbox project, which encourages the development of payment innovations and makes use of baht-backed stablecoins.
“Digital asset business regulations overseen by the SEC must be tested in our Digital Asset Regulatory Sandbox project, such as the trading of stablecoins in the DLT network,” she told reporters.
Ms Jomkwan stated that digital assets must be included in the sandbox supervised by the SEC and the central bank in order to be used for payment under certain conditions, within a specific area, or for a limited amount.
She emphasized the importance of having an appropriate regulatory framework that integrates with other relevant laws, such as the Anti-Money Laundering Law.
Digital Euro Coming
Meanwhile, the United States is the only country to impose a presidential ban on a central bank digital currency (CBDC), following Trump’s swift decision to prohibit a digital dollar. Analysts believe the effort will pave the way for dollar-backed stablecoins to become the de facto digital dollar.
Before the ban, the United States was one of more than 130 countries, accounting for 98% of the global economy, considering a CBDC to capitalize on the rapid pace of technological change.
China, along with the Bahamas and Nigeria, was among the first to implement CBDC. Later this year, the European Central Bank plans to lay out the key features of a digital euro.
Thailand has been a pioneer in alternative payment schemes in Southeast Asia, with a focus on improving banking efficiency and lowering cross-border trade costs rather than undermining the dollar.
The Bank of Thailand began investigating the use of CBDC for domestic purposes in 2018, as the banking system was rapidly digitizing its services, and was looking into cross-border possibilities with other central banks in the region.
In 2019, the regulator collaborated with the Hong Kong Monetary Authority to launch the joint Inthanon/Lionrock project, which investigates payment possibilities between the two economies.
The BIS Innovation Hub, the Central Bank of the United Arab Emirates, and the People’s Bank of China’s digital currency collaborated in 2021 to create mBridge, the third phase of the expanded Thai/HK CBDC project.
Kasidit Tansanguan, director of the Bank of Thailand’s digital currency unit, stated that the project aims to investigate the viability of DLT and a new business model utilizing multiple CBDCs without corresponding banks.
Thus, barriers to cross-border fund transfers and foreign exchange transactions can be addressed by making them cheaper, faster, more transparent, and safer, with lower settlement risk.
“The goal is for businesses to have more flexibility in using local currencies as a way to mitigate exchange rate risks. In other words, it avoids using the US dollar as an intermediary currency,” Mr Kasidit explained to the Financial Times publication.
