Thailand-based bitcoin exchange Bitcoin Co LTD has formally resumed services after receiving a letter on 31st January from the Bank of Thailand (BoT) clearing the company for bitcoin trading.
BoT officials had previously stated that such activity was illegal under Thai law, an announcement that forced Bitcoin Co LTD to reposition itself as a bitcoin mining equipment reseller.
David Barnes, managing director of Bitcoin Co LTD, confirmed the news to CoinDesk, saying that the company restarted exchange services on 15th February:
“After we received an update from the Bank of Thailand, we decided it was appropriate to restart our business, which had been on hold since August 2013.”
Despite the company’s lengthy absence from the market, Barnes said that trading volumes have already returned to 2013 levels. “It’s about in line with, or a slight improvement from, where we left off in July,” he said.
Yet, while the bank letter has been heralded as a change in bitcoin’s legal status in the Asian nation, the full picture is still not clear.
Frankie Bishop, a representative from the Facebook group Bitcoin Thailand, suggested that, whatever headlines result from the news, the situation on the ground remains largely unchanged.
“The Bank of Thailand did not change their regulation,” he said. “All they did was affirm what was correct the whole time, that it was out of their scope of regulation.”
Premature shutdown?
The announcement, for the moment, overturns previous guidance from Thailand’s Foreign Exchange Administration and Policy Department that had been widely interpreted as a bitcoin ban.
The agencies had told Bitcoin Co Ltd that it was illegal to buy or sell bitcoins, exchange bitcoins for goods or services, or send and receive bitcoins outside of Thailand in an early hearing on the matter. That guidance caused the company to abruptly suspend operations with no timetable for a return.
“Based on such a broad and encompassing advisement,” the company wrote last year, “Bitcoin Co Ltd therefore has no choice but to suspend operations until such as time that the laws in Thailand are updated to account for the existence of bitcoin.”
Bishop, however, suggests that Bitcoin Co Ltd may have been premature in the decision to pull its services, and indicated that he has been actively downplaying the misconception that bitcoin had been banned in Thailand:
“The ban was solely based on what was ‘verbally’ communicated during that hearing.”
“Now, correct me if I’m wrong,” he continued, “but have you ever heard of any regulation being set by any government without any sort of formal procedure, and or follow-up hearings, to make proper regulatory determination with anything? And, to apply it formally with officials signing off on it? I think not.”
Bishop went on to say that, in the interim, the local community has traded bitcoin through online venues such as OKPAY and LocalBitcoins.com – which, he stated, were “never blocked”, despite the Thai government’s sometimes aggressive internet controls.
However, the widespread reports of the ban “seriously deterred” new users from getting involved, he said, adding, “The loss is incalculable, I’m afraid to say.”
Looking for guidance
Translations obtained by BitLegal suggest that the letter was a formal response to Bitcoin Co Ltd’s request for regulatory clarity on its ability to do business in Thailand, which was issued last June.
Though Bitcoin Co Ltd could possibly have continued business had it not sought oversight, without legal clarification, Barnes said, the company would have had difficulty obtaining financing from the corporate-level banking institutions that it believed it needed for growth.
Notably, the BoT has not changed any of its existing regulations per the company’s request. The most important thing to take away from the letter may be statements suggesting that bitcoin does not qualify as a “foreign currency”, however.
The BoT said that Bitcoin Co Ltd, and by extension other exchanges, do not need a permit for operations provided there is no sale of foreign currency on the exchange.
“If the bitcoin that the company allows to be exchanged into Thai baht […] can also be used to exchange into other foreign currency inside or outside of Thailand, without the company being able to stop these exchanges,” Marc Nickels from BitLegal explained, “then the company may fall within the guidelines that would [require] a permit.”
Looking forward
Despite the step forward in relations between the BoT and Bitcoin Co Ltd, reaction to bitcoin at the bank remains mixed, Barnes said.
“Most individuals at the bank seemed very interested in bitcoin and intrigued to hear more; a few individuals seemed quite hostile to the concept,” he said.
Furthermore, Barnes doesn’t see the BoT expending any more effort on the subject anytime soon:
“I don’t expect BoT to spend much more time on the issue, as at present bitcoin usage in Thailand is simply not big enough to require their resources.”
Still, both Bishop and BitLegal suggest a verbal understanding may not be the best outcome for bitcoin.
“It seems like the exchange is on decent footing,” Nickel concluded. “Except that what they didn’t say in the press release is that there could be some law or regulation that pulls the rug out from under them at any time. Essentially, no guarantees.”
Bishop also had his doubts that the letter constituted any form of legal clarification:
“I mean, seriously, this thing has been so ridiculous – and now people are saying that bitcoin is legal because of one letter, written by someone at the BOT, sent to a prospective exchange operator? Please…”
Barnes, however, sees it as a positive for the local ecosystem, saying that the announcement is likely to spur involvement in bitcoin trading and convince more businesses to begin conducting trade out in the open, at least for now.