The SEC building on Vibhavadi Rangsit Road. The regulatory body maintains that bitcoin is not legal tender in Thailand. PATIPAT JANTHONG
Despite allowing Thai investors to speculate on bitcoin via an international global derivatives trading service, the Securities and Exchange Commission (SEC) has insisted bitcoin futures is a regulated futures contract even as bitcoin itself is not legal tender in Thailand.
Bitcoin futures is a futures contract that allows investors to have the opportunity to receive a return generated from the price movement of bitcoin, but [bitcoin futures] is not bitcoin, said the SEC statement.
The market regulator pointed to how stock futures are a futures contracts and not stocks.
“The SEC does not endorse the status of bitcoin and bitcoin is not legal tender to pay off debt,” said the statement.
“Bitcoin is an asset that can be [traded], but Thailand does not regulate bitcoin transactions.”
Investment in bitcoin futures and bitcoin futures trading are offered on the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME), both of which are under the supervision of the US Commodity Futures Trading Commission (US CFTC).
Bitcoin futures kicked off in two of the world’s major derivatives exchanges in mid-December.
The US CFTC is a member of the International Organisation of Securities Commission (IOSCO) and there is a memorandum of understanding on support and information exchange between IOSCO members, which includes Thailand’s SEC.
The SEC’s clarification came after Monday’s news that Phillip Securities Thailand is offering Thai investors international global derivatives trading on bitcoin. Market regulators are in consensus that the move was legitimate.
Earlier, Apisak Vongvanij, head of global markets at Phillip Securities, said customers who wanted to trade bitcoin futures must apply for its global derivatives service, allowing them to trade futures on 15 global futures markets, including the CBOE and CME.
Investors have to put money down to cover their investment margin and trading will be quoted in US dollars.
The risks, however, consist of cryptocurrency volatility, preparation to increase liquidity to cover collateral of an underlying asset on a daily basis, and the fact that bitcoin is a leverage investment product, according to the SEC.
“Investors have to consider their own risk susceptibility. If they do not comprehend or are not ready [to invest in bitcoin], then they should avoid it and brokerage firms that advise clients on investment have to take into account clients’ financial condition, understanding, and risk susceptibility,” said the SEC.
Following the wild swings seen in bitcoin’s trading value, especially over the last two months, Prime Minister Prayut Chan-o-cha instructed the Finance Ministry to educate people about the risks of bitcoin investment.
The Bank of Thailand, the Securities and Exchange Commission, the Finance Ministry and the Anti-Money Laundering Office have agreed to set up a working panel tasked with considering potential measures for handling problems that the digital currency may cause.