Bank of Thailand has disclosed plans to allow virtual banks to operate in the country for the first time. Financial firms will be able to provide services by 2025.
The central bank’s “Consultation Paper on the Framework for Virtual Bank Licensing” states that applications enabling virtual banks to act as financial service providers will be launched later in 2023. The recent move focuses on increasing competition and boosting Thailand’s economic growth. By 2024, the Bank of Thailand will apply to interested companies for three different licenses. According to the report, at least 10 parties are interested in the granting of the license.
Under the license framework, virtual banks are regulated and overseen in the same way as traditional commercial banks. In addition, qualified applicants must meet certain requirements.
The central bank also pointed out that virtual banks should not initiate a race to the bottom through irresponsible lending, give preferential treatment to related parties and abuse their market dominance, which poses risks to financial stability, depositors and consumers.
According to the central bank, virtual banks will be in a “constrained phase” for the first few years of operation, which will include close monitoring to avoid systemic financial risks. Thailand’s SEC recently announced plans to tighten crypto regulations to expand investor protections. Authorities are also working on strict guidelines for crypto advertising.
Thailand Gearing Up For Crypto-related Developments
Thailand recently signed a technology cooperation agreement with Hungary to support the adoption of blockchain technology as the country faces rapidly growing demand for mobile payments, e-commerce and cryptocurrencies. The country has seen a slew of crypto-related developments in 2022, including plans to pilot a central bank digital currency for around 10,000 users. Thailand ranks eighth in global crypto adoption index by analytics firm Chainalysis.