On October 19 Thailand announced a consultation on potential Thai Baht stablecoin regulations, with Taiwan publishing draft regulations this week and Nigeria final ones. Nigeria’s are the most notable because they are clearly an attempt to control the local usage of dollar stablecoins.
Thailand’s approach appears strongly inspired by Hong Kong, where a distinctive feature is that all stablecoin holders are subject to KYC, at least in the early stages. Hong Kong initially only awarded licenses to two organizations, and Thailand has signaled that it would only license a small number of companies initially and that they need to demonstrate added value beyond other payment methods. Stablecoins can offer neither interest nor incentives, and redemptions are required within one business day.
Reserves initially can only be held in bank deposits, but spread across several banks, with short term government bonds to be considered later. Thailand has FX controls, which means not only is there no avenue for the issuance of foreign currency stablecoins, but stablecoin wallet providers are barred from connecting to offshore digital asset exchanges to avoid circumvention of FX controls. Plus, the Bank of Thailand has made it clear it will not license retail FX for speculation, and a Thai issued USD stablecoin would match that categorization.
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