Due to several favourable features, bitcoin and other crypto-currencies have become a preferred choice for domestic and cross-border criminal networks to hide their ill-gotten funds.
Anonymous ownership is one big advantage. Other benefits include real-time cross-border tradability, as well as the safety of blockchain software underlying the virtual currencies.
As a result, Thai authorities are quickly moving to amend laws to catch up with the latest technology abused by domestic and international criminal networks, especially with regard to money-laundering via bitcoin and other units.
The Anti-Money Laundering Organisation (AMLO) legislation will be amended to expand the agency’s legal authority to require all digital-currency exchangers to report their transactions to relevant authorities, while AMLO will be empowered to follow the digital money trail as well.
However, AMLO is likely to face a new challenge. Unlike fait money in bank accounts, which could be frozen by AMLO based on credible evidence in connection with money-laundering and related wrongdoings, owners of digital currencies can be anonymous on the digital platform, so it will be difficult to bring them to heel, if not impossible.
In addition to money-laundering activities, bitcoin and the likes are attractive for hedging exchange-rate risks, since investors can avoid the Bank of Thailand’s rules on buying and selling foreign exchange by putting funds into crypto-currencies.
In some other countries, withdrawals of bitcoin and other digital units are already subject to anti-money-laundering and “know-your-customer” rules so as to tighten government surveillance on the digital units.
Given their popularity among speculators and investors worldwide, bitcoin and digital currencies have been abused to lure innocent savers to put money into illegal ponzi schemes that promise high returns. However, high returns are generally short-lived, since these pyramid-like schemes need new victims to pay the older ones, so they soon will collapse, resulting in significant financial damage for many of the participants.
The Finance Ministry also has issued a second public warning in which people are reminded that bitcoin and other crypto-currencies are not legal tender under Thai law, so there is no legal fallback as far as these units’ status as a medium of exchange is concerned.
The warning also explicitly states that the prices of bitcoin and other crypto-currencies, which have wildly fluctuated, have no fundamental support in terms of underlying assets and businesses. Therefore, prices have roller-coastered based on only demand and supply, and since the bitcoin supply is fixed, there has been speculation that its price will go up, but may then collapse as soon as the hype is over.
After all, crypto-currencies may have earned negative publicity as units for criminals to launder their funds. But bitcoin and the likes as well as the blockchain technology also have a wide range of benefits as well.
For example, cryto-currencies are part of the initial coin offering (ICO), a new method to raise funds for tech start-ups as well as small and medium-sized enterprises that will not dilute business founders’ ownership like other methods.
The Securities and Exchange Commission is expected to announce rules and regulations on ICOs shortly to set the record straight before this new fund-raising method can be adopted legally and more widely.
Published : February 01, 2018
By : The Nation