In brief
The Bank of Thailand (BOT) has published a public hearing proposing a new regulatory framework for Thai baht-denominated stablecoins ("THB stablecoins"). The proposal would establish a regulated ecosystem for the issuance and use of THB stablecoins as a means of payment. The proposed licensing and regulatory requirements aim to preserve their value, protect users, and mitigate financial stability, technology and financial crime risks. The hearing is open until 17 November 2026.
Under the proposed framework, a THB stablecoin would be a form of tokenized money using distributed ledger technology (DLT), pegged to the Thai baht at a 1:1 rate and fully backed by reserve assets. The BOT proposes to regulate both THB stablecoin issuers and wallet providers as payment service providers under the Payment System Act B.E. 2560 (2017) ("Payment System Act"), with specific requirements relating to licensing, reserve assets, redemption, customer protection, technology, and financial crime risks.
In more detail
Proposed licensing framework
The proposed framework would establish an open-loop THB stablecoin ecosystem with two main regulated businesses: THB stablecoin issuers and wallet providers. The BOT proposes that both activities be regulated as payment services under the Payment System Act and would therefore require a license before providing these services. In the initial phase, the use of THB stablecoins would be limited to domestic transactions, reflecting the BOT's concerns about the potential use of THB stablecoins to circumvent measures intended to prevent speculation in the Thai baht.
THB stablecoins are intended to operate in an open-loop ecosystem and have the potential to support broader use cases than e-money, which is generally used for payments for goods and services. Potential use cases include programmable payments, 24/7 transactions, and settlement between financial institutions. The open-loop structure would also allow a wallet provider to provide services for THB stablecoins issued by more than one issuer.
THB stablecoin issuers would be responsible for issuing and redeeming THB stablecoins, managing the reserve assets backing the stablecoins, and maintaining their value at a 1:1 rate against the Thai baht. In the initial phase, the BOT proposes to limit the number of issuer licenses. Applicants would be assessed based on factors such as their financial strength, management capabilities, risk management, and operational readiness. They would also need to show that THB stablecoins provide added value for users, the payment system or the financial system as a whole, for example, by reducing costs or operational processes, shortening transaction times or improving access to financial services, and have the potential to scale in the future.
Wallet providers would provide wallet services to customers, including holding, transferring and receiving THB stablecoins and making payments. Unlike issuers, the BOT does not propose a fixed limit on the number of wallet providers. Applications would be accepted periodically to promote competition, innovation and customer choice. Applicants would need to present a business model and plan with at least one issuer that provides added value for users and supports further innovation, such as facilitating payments or improving the efficiency of financial services.
Acquisition and redemption of THB stablecoins. Users could acquire THB stablecoins through a wallet provider or issuer at a 1:1 rate, or at a market price through an eligible digital asset business operator regulated by the Thai Securities and Exchange Commission (SEC). THB stablecoins could be converted back into Thai baht through the same three channels, although the market price through a digital asset business operator may differ from the 1:1 rate.
Key requirements for issuers
The BOT proposes specific requirements for issuers to support the stability and reliability of THB stablecoins.
Reserve assets and redemption. In the initial phase, issuers would need to maintain reserve assets equal to 100% of the THB stablecoins issued, in the form of bank deposits spread across more than one bank. Reserve assets would need to be kept separate from the issuer's other assets. Holders would be entitled to redeem their THB stablecoins for Thai baht at a 1:1 rate within one business day. The BOT may consider allowing other high-quality liquid assets (HQLA), such as short-term government bonds, to form part of the reserve assets in the future.
No interest or holding-based returns. Issuers would not be allowed to pay interest or other returns based on the amount or period for which customers hold THB stablecoins. This is intended to ensure that THB stablecoins are used mainly as a means of payment rather than as a savings or investment product.
Transparency and risk management. Issuers would need to publicly disclose information on their reserve assets and outstanding THB stablecoins daily and arrange for an external review of the reserve assets at least annually. They would also need appropriate controls for liquidity, operational and technology risks, including risks associated with DLT and smart contracts.
AML/CFT controls. Issuers would need to have systems to monitor the circulation and use of THB stablecoins, including by limiting their use to KYC-verified wallets (whitelisting). Issuers would also need the technical ability to remotely freeze, seize or burn THB stablecoins where they are used in breach of applicable conditions, such as for illegal transactions or through bridging or wrapping the stablecoins for use outside the regulated framework.
Financial and management requirements. Applicants would need sufficient financial resources to support the business, including the ability to operate for at least six months without revenue. The proposed framework would also require relevant experience among directors and senior management, including experience in DLT and financial or payment services, as well as certain requirements for key personnel to be based in Thailand. The head of IT must also work full-time in Thailand.
Key requirements for wallet providers
The BOT proposes separate requirements for wallet providers, focusing on customer protection, technology risks and financial crime controls.
Safeguarding and segregation of customers' assets. Wallet providers would need to keep customers' THB stablecoins separate from their own assets and maintain proper transaction records. They would also need processes for handling incorrect transactions, customer complaints and customer support, as well as appropriate IT and cybersecurity controls.
Customer identification and transaction monitoring. Wallet providers would need to carry out KYC/KYM and customer due diligence (the same standard as that applicable to e-money service providers), including verifying customers and merchants before they can use wallet services. Transfers would be allowed only between wallets that have completed the required identity checks. Wallet providers would also need to comply with the relevant fraud-management and technological-crime requirements.
Restrictions on connections with overseas digital asset exchanges. Wallet providers would be restricted from providing services to or connecting with overseas digital asset exchanges that are not supervised by the SEC. This is intended to prevent THB stablecoins from being used to avoid Thailand's foreign exchange control requirements.
Looking ahead
The proposed framework remains subject to public consultation, which is open until 17 November 2026. Businesses considering issuing THB stablecoins or providing wallet services in Thailand should assess how the proposed framework may affect their business.
From a business perspective, operators intending to enter the THB stablecoin market should be well prepared in terms of financial resources, operations and expertise. The number of issuer licenses is intended to be limited, reserve assets and customers' assets cannot be used for the operator's own purposes, and robust operating systems will need to be put in place.
Beyond THB stablecoin issuers and wallet providers, technology service providers that supply back-end systems to them should also monitor these developments closely, as certain obligations may flow down to third-party service providers.
At the outset, the standards applicable to payment service providers, particularly e-money service providers, may apply, as the BOT considers that THB stablecoin issuers and wallet providers share similar characteristics with e-money service providers. However, additional sub-regulations or standards specific to THB stablecoin service providers may be issued. While the BOT may not prescribe the type of blockchain (private or public) to be used, service providers will need to ensure that risks associated with the technology they adopt are properly addressed and mitigated. These additional requirements could be stricter than those under traditional payment regulations, given the BOT's strong concerns about the potential impact of THB stablecoins on Thailand's financial stability.
On a positive note, the proposal signals the BOT's acceptance of THB stablecoins and their potential for wider adoption, including possible future use as collateral for loans from commercial banks.
For further information, please contact our team at Baker McKenzie.
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Phetrada Kampusiri and Phatraporn Phatrapiboon, Associates, have contributed to this legal update.