FRIDAY, March 29, 2024
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The smartest stance on bitcoin is caution

The smartest stance on bitcoin is caution

Doubts about the future of cryptocurrencies and their susceptibility to misuse render them a risky bet, but there’s room for optimism

Finance Minister Apisak Tantivorawong has taken a cautious stance on the growing popularity of bitcoin and other digital currencies, warning the phenomenon is quite risky for those considering a bet.
For example, over a 24-hour period, the value of bitcoin and the like can plunge as much as 20 per cent in global trading – a staggering one-day loss of around US$200 billion – while the benefits remain unclear at this stage.
For Thailand, the trading value of bitcoin and similar digital currencies, which have become popular among a growing number of investors and 
speculators, is estimated to be worth around Bt300 million per day. That’s relatively small and has no significant impact on the economy and financial system at this stage.
However, South Korea is more 
worried, given its large number of investors and speculators in bitcoin and other so-called cryptocurrencies, prompting that country’s finance 
ministry to consider imposing a ban on trading in the digital units.
At this stage, it appears that the Bank of Thailand sees bitcoin and other digital units as similar to other financial instruments and securities traded on the stock market and other exchanges. As such, it feels, they should be regulated, since they are not legal tender, like physical coins and banknotes, which by law must be accepted if offered in payment of a debt. Digital currencies are not affecting the country’s money supply either, so they have nothing to do with the central bank’s monetary or interest-rate policies at this stage.
Digital currencies, including those to be issued by listed firms such as Jaymart, appear more like digital tokens used by members of certain establishments and businesses as a medium of exchange for goods and services. If they are deemed akin to financial instruments and commodities, as well as debt and equity securities, they are probably under the jurisdiction of the Securities and Exchange Commission.
Jaymart, a financial services and mobile-phone retail chain, has said it will shortly launch the country’s first “initial coin offering” (ICO) for its Jfin digital units in a bid to raise Bt660 million from investors to finance a digital lending platform.
In this context, ICOs are similar to IPOs (initial public offerings) of stocks offered by listed companies, whose shares are then traded on a secondary market like the Stock Exchange of Thailand.
Since the supply of bitcoin and other digital currencies is tightly controlled, rising demand for the units means prices will skyrocket, but the fundamentals underlying them remain too unclear to justify any 
long-term gains. As a result, investors and speculators are subject to severe ups and downs in real time, while there is no legal recourse at this stage for those financially injured by such an investment.
In addition, bitcoin and other digital units have become the choice of unscrupulous people and money-laundering networks taking advantage of the blockchain technology that underpins digital currencies. Since the identities of bitcoin owners can be hidden in the blockchain, the cryptocurrencies are preferred by those wanting to legalise their ill-gotten funds.
Yet, the future potential benefits of the digital units as well as the blockchain technology should not be underestimated either, so Thai authorities ought to be cautiously optimistic.

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