A Thai company called Bitcoin Co. Ltd posted the below message on their Web site:
Trading suspended due to Bank of Thailand advisement
July 29, 2013
The purpose of the following statement is designed only to give information to our users about our choice to suspend our services.
During the past several months Bitcoin Co. Ltd., in Thailand, has been in the process of registering with the various Thai government agencies in order to operate in a lawful manner. Included in this due diligence was to reach out to the Bank of Thailand, the governing body that regulates financial transactions in Thailand, and ask for guidance as to any applicable licenses in buying and selling bitcoins.
Initially the Bank of Thailand had bypassed the company’s money exchange license on the basis that Bitcoin was not a currency, however the company was invited back, on July 29th, 2013, to participant in a conference about how Bitcoin works in general, and business operations of Bitcoin Co. Ltd. The conference was held with about 15 members of the Bank of Thailand in attendance. During this conference, managing director of Bitcoin Co. Ltd. gave a presentation about the workings of Bitcoin, the benefits of Bitcoin, insight into the company’s operations and future implications of Bitcoin.
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 of Bitcoin. The Bank of Thailand has said they will further consider the issue, but did not give any specific timeline [BP: So if the above activities have been declared illegal, what is there to consider?]
Bitcoin Co. Ltd. has currency exchange applications currently pending review with the Bank of Thailand. [BP: If illegal, what is there to consider?]
BP: If you go to the Bitcoin. Co. Ltd Web site you will see they are in the business of buying, selling, and exchanging Bitcoins in Thailand (they were selling Bitcoins at 2,788 Baht and buying at 3,121 Baht). In essence, you could exchange your Thai Baht for Bitcoins or exchange your Bitcoins for Thai Baht.
The story has spread throughout the world with Wired, Engadget, Ars,* and many more.**
Post Today cite BOT Governor Prasarn who states that in relation to the statement the Bitcoin company posted on their Web site, that the company contacted the BOT to request permission for the “money changer” business, but what they are doing is not exchanging of money. It may constitute being related to changes in the exchange rate. Therefore, we asked for suspension of activities through their Web site while we investigated. For now, we are liaising with relevant authorities to look at the details both the ICT (in relation to electronic transactions), Ministry of Finance, and the SEC before considering whether we can give a license or not.
Pic: AP.
(นายประสาร ยังกล่าวถึงกรณีการปิดตัวลงของเว็บไซต์ bitcoin เป็นเพราะว่า บริษัท bitcoin ซึ่งเป็นเว็บไซต์รับแลกเปลี่ยนเงิน มาติดต่อขอใบอนุญาตทำธุรกิจ money changer หรือ รับแลกเปลี่ยนเงิน แต่สิ่งที่ทำจริงๆ กลับไม่ใช่การรับแลกเปลี่ยนเงิน แต่อาจจะเข้าข่ายเกี่ยวข้องกับความเคลื่อนไหวอัตราแลกเปลี่ยน ดังนั้น จึงขอให้มีการหยุดการให้บริการผ่านเว็บไซต์ก่อนในระหว่างตรวจสอบ โดยขณะนี้ กำลังประสานกับหน่วยงานที่เกี่ยวข้องเพื่อตรวจสอบอย่างละเอียด ทั้ง กระทรวงเทคโนโลยีสารสนเทศและการสื่อสาร (ไอซีที) ซึ่งเกี่ยวข้องกับธุรกรรมอิเล็กทรอนิกส์ กระทรวงการคลัง และคณะกรรมการกำกับหลักทรัพย์และตลาดหลักทรัพย์ (ก.ล.ต.) ก่อนพิจารณาว่าสามารถให้ใบอนุญาตได้หรือไม่)
“Listening to their explanation, it is almost in the direction of the exchange rate so we asked they stop so we could investigate first and for now we asked they not involve themselves with the Baht because what they do may be a way to speculate on the exchange rate. Hence, we asked for time to look at the issue first. For the issue that they explained on being able to oversee other countries, the BOT asked them to send more information first” Mr. Prasarn stated ( “ฟังที่เขาอธิบาย มันค่อนไปในทางเกี่ยวข้องกับอัตราแลกเปลี่ยน จึงต้องขอให้เขาหยุดและตรวจสอบก่อน และเวลานี้เราก็ขอให้เขาไม่มายุ่งกับเงินบาท เพราะสิ่งที่เขาทำอาจเป็นช่องทางเข้ามาเก็งกำไรอัตราแลกเปลี่ยนก็เป็นได้ จึงขอเวลาศึกษาก่อน ส่วนกรณีที่เขาชี้แจงว่า สามารถทำได้ในการกำกับดูแลของประเทศอื่นๆ ทางแบงก์ชาติก็ขอให้เขาส่งข้อมูลมาให้ดูเพิ่มเติมแล้ว” นายประสาร กล่าว)
Why the Bank of Thailand is involved, the Foreign Exchange Administration and Policy Department state:
i. EXCHANGE CONTROL REGULATIONS
a. Rules and Regulations
The legal basis for exchange control in Thailand is derived from the Exchange Control Act (B.E. 2485) and Ministerial Regulation No. 13 (B.E. 2497) issued under the Exchange Control Act. These laws set out the principles of controls under which Notifications of the Ministry of Finance and Notices of the Competent Officer are issued.
b. Administration
The Bank of Thailand has been entrusted by the Ministry of Finance with the responsibility of administering foreign exchange. The governor of the Bank of Thailand shall appoint the officials of the Bank of Thailand as the Competent Officers under the Exchange Control Act (B.E. 2485).
All foreign exchange transactions are to be conducted through commercial banks and through authorized non-banks, namely authorized money changers, authorized money transfer agents, and authorized companies, that are granted foreign exchange licenses by the Minister of Finance. Any transactions not conducted through the above-mentioned licensees require approval from the Competent Officer on a case by case basis.
BP: It is clear that Bitcoin Co. Ltd has not been granted a license. Whether they will eventually need a license, or what kind of license, remains to be seen, but because they have not been granted a license this does not automatically mean that an individual in Thailand selling or buying Bitcoins with a Bitcoin exchange in another country, e.g. Mt Gox, is breaking the law. It is accurate to say that Thailand has not issued a license to a Bitcoin Exchange, but it is a different issue from banning Bitcoin.
*There is this quote in the Ars article:
“A ban would not surprise me since Thailand has never been shy about censoring the Internet in the name of public order and morals,” Jerry Brito, a senior research fellow at the Mercatus Center at George Mason University, told Ars by e-mail.
BP: This is about Thai government laws regarding money and foreign exchange, what on earth does this have to do with censoring the Internet? Bitcoin exchanges and sites about Bitcoin have not been banned.
** GigaOm was one of the few exceptions who didn’t simply rewrite the Bitcoin press release as a news story with David Meyer writing a post with the headline “Did Thailand really ban Bitcoin? Don’t be so sure“:
…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.
BP: Indeed…