Bitcoin mania, which has driven its price to a record high above 1.4 million baht, has sent signals to authorities as to whether they are ready to handle the rise of digital currency transactions.
Bitcoin has been rallying hard, jumping in 2020, breezing past its record high to reach US$42,000 (1.2 million baht) in January and pushing above $44,000 last week after Tesla Inc announced its $1.5-billion investment in the cryptocurrency.
Tesla also said the company would soon take payment for its electric vehicles in the currency.
Elon Musk, Tesla’s chief executive officer and one of the world’s richest people, has become the world’s greatest booster to cryptocurrencies.
His bitcoin investment has caused many investors to believe the digital currency could become a mainstream class of asset.
After the crash in 2018, bitcoin prices came roaring back late last year, driven by big international institutional investors who see it as a hedge against inflation in a pandemic era of huge financial stimulus.
The inflation rate rose recently after the US Federal Reserve and many central banks around the world injected money into global economies.
Previously, Paypal said it planned to launch an exchange and payment service with bitcoin and other digital currencies this year.
This means that more than 289 million PayPal customer accounts and millions of merchants worldwide will have access to bitcoin and other cryptocurrencies.
In Thailand, bitcoin is not very popular — just yet — but the opaque crypto market has attracted more and more investors.
Jirayut Srupsrisopa, co-founder and CEO of Bitkub Capital Group, a major cryptocurrency exchange in Thailand, said that after the bitcoin price broke one million baht apiece, has more than 4,000 new accounts are opening with the company per day with daily trading valued 2.5 billion baht.
This prompted the Securities and Exchange Commission (SEC) to order the company to stop accepting new clients until the company proves its online platform is able to accommodate surging trading activities.
The situation has alarmed financial authorities about their capability to handle the rise of crypto transactions as well as potential scams.
As a matter of fact, cryptocurrencies in Thailand lack legal status as currency. Its status as a store of value like gold remains in doubt. There are no bitcoin regulatory measures despite the fact the SEC has given broker licences to eight companies to operate digital coin exchanges.
As a result, the use of bitcoin for commercial payments is not protected and users will have to take the risk themselves.
However, the skyrocketing bitcoin price will fuel the greed of people who are looking for profit without sufficient knowledge and could easily become the victim of scams. Compared to other financial markets, the crypto market lacks strong regulation and it is easier to bring illegal behaviour into the market.
Until recently, several central banks showed a positive outlook toward digital currencies. They, including the Bank of Thailand, are trying to develop their own digital money, the so-called Central Bank Digital Currency (CBDC), to facilitate payment for businesses.
Authorities had better start thinking about setting a legal status for cryptocurrencies so they can implement appropriate measures to protect users and promote business transactions effectively.