Thailand’s central bank to allow virtual banks to function by 2025

Key Takeaways

• The plan titled “Consultation Paper on Virtual Bank Licensing Framework” states the applications for virtual banks will be available later in 2023.
• The central bank plans to issue three different licenses for interested companies by 2024. 

Monetary authorities around the world are gearing up to integrate digital assets into their activities. The bank of Thailand-the central bank of the country has now introduced plans to allow virtual banks to operate in the country for the first time by the year 2025.

The plan titled “Consultation Paper on Virtual Bank Licensing Framework” states the applications for virtual banks will be available later in 2023. As per the proposed plans, the central bank plans to issue three different licenses for interested companies by 2024. 

The bank of Thailand states that virtual banks will be under a “restricted phase” during their first years of operation, which will include close monitoring to prevent systemic financial risks.

In its plan, the central bank added, “Virtual banks should not initiate a race to the bottom through irresponsible lending, give preferential treatment to related parties, nor abuse dominant market position which will pose risks to financial stability, depositors, and consumers as a whole.”

The Bank of Thailand is currently working on putting out a pilot Retail CBDC-central bank digital currency by the end of 2022. This comes amid crypto adoption is spiking up in the country. In 2021, Thailand ranked 7th compared to other countries in terms of on-chain value received as a cryptocurrency adoption metric.

Thailand has become one of the leading countries in the world to adopt cryptocurrencies in recent years. The central bank has also conducted several CBDC Hackathons to open up public discussion on the topic and encourage industry participation.

Last year, Thailand’s financial regulator, the Securities and Exchange Commission (SEC), granted operating licenses to several digital asset operators. Recently, the Thai Fintech Association (TFA) and the Hungarian Blockchain Coalition had signed a bilateral Memorandum of Understanding (MOU) to support the introduction of blockchain technology to their respective financial sectors.