After a six-month hiatus, Thailand’s biggest Bitcoin exchange is up and running again following a softening of the national bank’s earlier declaration that the digital cryptocurrency was illegal.
Trading resumed Saturday for the first time since August. The Bank of Thailand has allowed Bitcoin.co.th, the country’s leading Bitcoin exchange, to resume normal operations so long as Bitcoin is only converted into Thai baht, the nation’s official currency, and not any other foreign tender.
This policy reversal by Thailand’s central bank comes at a time when many countries, including the United States, are wrestling with the legality of this nonregulated and anonymous online currency.
The debate in Thailand began last August when the national bank, in response to Bitcoin.co.th’s attempt to register their operation with the government, declared Bitcoin trade illegal. Though the bank cannot institute laws, it is still a powerful regulatory body. Any currency exchange wishing to operate within the country must be licensed by the bank.
But in the absence of any laws or legal precedent about how to deal with the experimental new currency, the bank said it had “no choice but to suspend” the exchange’s operations until the law could catch up.
While new laws have not been instituted, it appears the bank has gone ahead and reconsidered its position anyway. On Jan. 31, the Thai Bitcoin exchange received a letter from the central bank dated Dec. 12, 2013 that read in part:
After further consideration, Bitcoin exchange operations do not fall under the scope of the Ministry of Finance regulation, unless foreign currencies are also offered for exchange. Considering that Bitcoin Co. Ltd. only offers Bitcoin trades using Thai Baht and operates only within Thailand, we will restart our trading operations.
So essentially, the bank still does not regard Bitcoin as a currency, but now feels that because of that distinction Bitcoin trading operation do not fall under their purview. As a result, the Thai Bitcoin exchange is back up and running, having survived the last six months by solely focusing on Bitcoin mining—the process through which new Bitcoins’ value are unlocked by having a computer solve complex mathematical problems.
However, this is not a definitive solution regarding Bitcoin’s legality in Thailand. The letter points out that this conclusion is merely a legal interpretation, with no guarantees that the bank won’t change its regulatory stance in the future without warning.
Thailand isn’t the only country struggling to legally define the role of Bitcoin in its economy. Bitlegal is a site which tracks the legal status of Bitcoin in countries around the world. They categorize countries with Bitcoin activity as either being “permissible,” “contentious,” or “hostile” toward the currency.
The recent reversal by Thailand’s central bank has moved that country from the hostile category and into the contentious column, due to the lingering threat that the bank might change its position once again.
Joining Thailand in that category are China, India, and Kazakhstan. Indian Bitcoin exchanges ceased operation at the end of last year following a strongly-worded warning from the country’s central bank. That came just weeks after Bitcoin prices went on a wild ride sparked by a regulatory crackdown in China.
Despite this, Bitlegal only lists two countries as being openly hostile toward Bitcoin: Russia and Iceland. Without declaring Bitcoin a legal currency or not, the Icelandic central bank has determined that any domestic entity trading in Bitcoin is operating in violation of economic controls imposed after the country’s 2008 banking collapse. And the Russian government, including legislators, have taken steps since January to severely limit Bitcoin activity by linking it to terrorism.
The United States is among the majority of countries Bitlegal lists as being permissible toward the currency. The Treasury and federal courts have declared Bitcoin a legal unit of exchange without granting it the status of legal tender. But federal law enforcement officials have kept a close eye on Bitcoin activity given the currency’s reputation as a medium of exchange for criminal activities. The world’s largest Bitcoin exchange had its funds seized by the U.S. Department of Homeland Security last year for technically violating federal money laundering laws. And despite the legality of recreational marijuana in two states, Bitcoin operations have refused involvement in such sales for fear of violating the federal ban on the drug.