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The Bank of Thailand (BoT) has declared THT, a Baht-pegged stablecoin on Luna-powered Tera, in violation of the Currency Act of 1958, which gives the state exclusive authority to issue money. Pruettipong Srimachand, Assistant Governor of the Legal Group at the central bank, reported on the development around stablecoins in the private sector. THT is denominated and valued at one Thai Baht, much like how stablecoin works. As per the document circulating online,
“a new stablecoin, THT, has been created abroad on the Terra Platform… Although THT Is currently not used as a medium of exchange, it could cause fragmentation to the Thai currency system should THT or other similar stablecoins come to replace, substitute, or compete with Baht issued by the ROT.”The central bank feels the stablecoin could “ultimately” affect the general public's confidence in the stability of the national currency system. As such, “any activity involving THT is deemed illegal, as the creation, issuance, usage or circulation of any material or token for money is a violation of Section 9 of the Currency Act 1958,” said the bank in its press release. The bank also cautioned the public in engaging with the stablecoin and even advised them to “refrain” from participating in any activity involving THT as there are no legal assurances or protection. Users could further be at risk of cyber theft and money laundering, it said. “A short-sighted move that will primarily harm Thai citizens as the rest of the world keeps innovating,” commented Jake Chervinsky, General Counsel at Compound Finance. A similar move was made by China in the last quarter of 2020 when the country’s central bank proposed a law that recognizes the renminbi in both physical and digital form but as an exclusive yuan-pegged coin in mainland China. It proposed prohibiting any other individual or legal entity from issuing or selling fiat-backed tokens to prevent the risk of replacing the circulation of the Renminbi.