The Bank of Thailand has issued a stern warning against a privately issued stablecoin pegged to the national currency, the Thai Baht, as the Baht-pegged stablecoin produced by Terra has come under fire from Thai bankers.
It has been reported that 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.
Pruettipong Srimachand, the assistant governor of the legal group at the Bank of Thailand, said:
“The creation, issuance, usage or circulation of any material or token for money is a violation of Section 9 of the Currency Act 1958.”
However, 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 report said that 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.
Thus, 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.”