The Baht-pegged stablecoin produced by Terra has come under fire from Thai bankers.
The Bank of Thailand has issued a stern warning against a privately issued stablecoin pegged to the national currency, the Thai Baht.
According to a Bangkok Post report on March 18, the central bank has told citizens that Thai Baht Digital (THT) has no legal assurances or protection and that users could be at risk of cyber theft or money laundering
Citing a sixty-year-old law, the central bank’s assistant governor of the legal group, Pruettipong Srimachand, stated that any activities involving the stablecoin are considered illegal:
“The creation, issuance, usage or circulation of any material or token for money is a violation of Section 9 of the Currency Act 1958.”
The stablecoin is issued on the Terra platform which has produced various other stablecoins including the TerraUSD, first issued in September 2020, and TerraKRW. It is also behind the Chai payments app, an e-commerce wallet powered by stablecoins that is widely used across Asia.
The THT is pegged to the Thai Baht raising fears it could cause fragmentation of the Thai currency system should it attempt to compete with the central bank issued currency. Mr Pruettipong added:
“Such usage would ultimately affect the general public’s confidence in the stability of the national currency system, which is the cornerstone of all economic activities.”
Terra was founded in 2018 in South Korea, launching with $32 million in backing from Binance and Polychain. In January 2021 the firm behind the platform, Terraform Labs, raised $25 million in a new funding round from Galaxy Digital, Coinbase Ventures, and Pantera Capital among others.
Thailand’s military backed government has taken a similar stance to that in China where only the central bank issued digital currency will be officially tolerated. China has accelerated its program for the CBDC release, with further infrastructure tests prior to launch, which could coincide with the 2022 winter Olympics in Beijing.
The Bank of Thailand has also accelerated its own research into a national CBDC with the Feb. 23 announcement of a joint effort in coalition with the Hong Kong Monetary Authority, the Central Bank of the United Arab Emirates, and the Digital Currency Institute of the People’s Bank of China.