Thailand is Following Japan in Crypto Regulation, Will it Benefit Local Market?
At the Fourth Regional Counter-Terrorism Financing Summit, Thailand’s Deputy Prime Minister Wissanu Krea-ngam disclosed the plans of the government to strengthen regulations around the crypto market.
Minister Wissau specifically announced the intent of the government to solidify Anti-Money Laundering (AML) and Know Your Customer (KYC) policies for exchanges to comply with to put an end to the usage of digital assets by criminals to finance fraudulent operations.
The call for stricter AML and KYC policies follows the imposition of new tax regulations imposed by the Thai government.
Japan-Like Policy, Will it Benefit Local Investors?
By nature, cryptocurrencies are not anonymous. The transactions on the Bitcoin and Ethereum blockchain networks, for instance, two of the most valuable and widely utilized digital assets in the global market, can be tracked using transaction untangling tools and monitoring services offered by companies like Chainalysis.
Most recently, the world’s largest cryptocurrency exchange Binance agreed to a deal with Chainalysis to reduce money laundering and the usage of cryptocurrencies by crime syndicates in an attempt to further legitimize the global cryptocurrency exchange market.
“Cryptocurrency businesses of all sizes face the same core challenge: earning the trust of regulators, financial institutions and users. We expect many to follow Binance’s lead to build world-class AML compliance programs to satisfy regulators globally and build trust with major financial institutions,” Jonathan Levin, co-founder and COO of Chainalysis said at the time.
Firms like Chainalysis are able to allow cryptocurrency exchanges to build trust with banks and financial institutions through the utilization of transaction monitoring software that software recognizes patterns and uses algorithms to identify addresses and transactions potentially involved in fradulent services.
As such, in general, cryptocurrencies are not anonymous and more transparent than fiat money. It is easier to unravel fraudulent transactions on public blockchain networks than in private banks that rely on cash.
The call for the crackdown on money laundering with the usage of anonymous cryptocurrencies by Thailand’s Deputy Prime Minister Wissanu Krea-ngam likely refers to privacy-focused digital assets like Monero, Zcash, and Dash.
Throughout the past eleven months, since early 2018, the government of Japan similarly expressed concerns towards the three anonymous cryptocurrencies that are often described as the “three siblings” in Japan.
On October 24, the government of Japan granted the cryptocurrency industry with self-regulatory status, enabling local cryptocurrency-related businesses and digital asset exchanges to self-regulate and focus on facilitating the growth of the local market.
“It’s a very fast moving industry. It’s better for experts to make rules in a timely manner than bureaucrats do. We will make further efforts to build an industry that is trusted by customers,” a senior Financial Services Agency (FSA) official said at the time.
However, two core elements in the major decision of Japan to trust the local cryptocurrency sector to take appropriate steps in growing the market were the requirement of the government to delist anonymous cryptocurrencies and the imposition of a more rigorous verification process for the approval of cryptocurrency exchanges.
Japanese financial authorities provided local businesses with flexibility under the premise that money laundering through the use of digital assets is completely blocked out voluntarily by exchanges.
Will Thai Exchanges Receive More Flexibility
The main concern towards the crypto market from the Thai government is money laundering. If exchanges can prove to the government that it can voluntarily stop the usage of cryptocurrency trading platforms by criminals, then it is possible that Thailand opens up the local market to more efficient and practical regulations.
Then, it would be possible for local investors to build trust towards cryptocurrency exchanges, building a more vibrant and active ecosystem for both companies and investors.