The government of El Salvador is one of several nations that are encouraging the use of cryptocurrencies as payment for goods and services, not only accepting but also supporting the use of these digital currencies as a legal tender.
Some other nations have taken bold steps to create their own central bank digital currency (CBDC), but they have yet to see much of an impact from such steps taken to digitalize their national currencies.
Currently, blockchain technology experts are collaborating with financial institutions to forge out the best strategies for introducing cryptocurrencies on a global scale without affecting the economies of such countries. Specifically, regulatory guidelines and tax incentives are being introduced to allow cryptocurrencies transactions to take place.
According to reports, Thailand, one of the largest countries in Asia, is faced with a dilemma regarding the use of cryptocurrencies as digital assets. Subsequently, the central bank has announced tougher regulations on cryptocurrencies and limiting their use for payments, ensuring that they can only be traded as assets on licensed platforms after coming under intense pressure.
Nonetheless, the move which is expected to limit the Thai crypto market at a time when Bitcoin prices have crashed has been viewed as an obstacle, as Thailand has been heavily pressured in recent years.
It is stated that The Bank of Thailand (BOT), the Securities and Exchange Commission (SEC), and the Ministry of Finance (MOF) have issued a joint release, stating “digital asset business operators have expanded their business to cover services related to the use of digital assets as a means of payment for goods and services”.
The government financial institution is of the opinion that the potential wider adoption of digital assets as a means of payment as well as their usage as an investment in the cryptocurrency market could become a potential risk to businesses and individuals.
This can happen as a result of cyber theft, data breaches, or money laundering by criminals and drug cartels. As a result, regulators have been forced to develop strict guidelines for digital assets.
It is noted that the government of Thailand had considered that in 2022, all taxpayers who gained from cryptocurrencies, including investors and mining operators, are subject to a 15% withholding tax, while digital asset exchanges are exempt from such duties”.
However, these regulations did not see the light of the day as the financial regulators of Thailand decided to axe the plans to levy a 15% withholding tax on cryptocurrency transactions following a massive resistance from the country’s crypto traders. This was seen as the right move from the part of the cryptocurrency traders and investors alike.
Proposed Crypto Regulations for Thailand
The government rather settled for the following regulations which were more flexible than what was initially proposed.
- It stated that “Earned income on crypto trading or mining can be reported as capital gains on income taxes, according to a Financial Times report”. These new rules or regulations would allow traders to offset their losses against gains made in the same year.
- Thailand’s Revenue Department which had previously planned to create a regulatory body that would be in charge of cryptocurrency trading following significant growth in the size and value of the market in 2021 would be implemented in the first quarter of 2022.
However, the government and associated financial institutions should be mindful of the excessive taxes and regulations imposed on crypto transactions as this could force potential investors to migrate to other countries that are more crypto-friendly and accommodating.
This can cause the nation to miss out on the opportunities for early adopters incentives and prospects associated with supporting blockchain technology projects and cryptocurrencies with the Nation.
In conclusion, It is evident that there would be an influx of companies and businesses which would create more job opportunities and increase the flow of revenue into the country as opposed to countries that do not give any support to blockchain technology projects.
