Bank of Thailand to allow first virtual banks by 2025

By allowing virtual banks, Thailand seeks to boost competition and economic growth.

Bank of Thailand (BOT) 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, a Bloomberg report shows

The ‘Consultation Paper on Virtual Bank Licensing Framework’ has been published by the central bank, and applications shall be available later in 2023, allowing virtual banks to act as financial services providers. The move focuses on boosting competition and Thailand’s economic growth.

The BOT will issue three different licenses for interested companies by 2024. There are at least 10 parties interested in granting permissions, the report states.

Regulations and supervision for virtual banks will be the same as those for traditional commercial banks under the licensing framework. Moreover, qualified applicants will need to meet certain requirements. The country’s central bank also noted:

“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.”

According to the central bank, virtual banks will be under a “restricted phase” during their first years of operation, which includes close monitoring to prevent financial systemic risks. Thailand’s Security and Exchange Commission recently announced plans to tighten rules for crypto, aiming to expand investor protection. A strict set of guidelines for crypto ads is also being developed by the authority.

Thailand recently entered into a technology cooperation agreement with Hungary to support the adoption of blockchain technology, amid a fast growth of demand for mobile payments, e-commerce, and cryptocurrencies in the country, Cointelegraph reported.

The country has seen a number of crypto-related developments in 2022, including plans to pilot a central bank digital currency (CBDC) for roughly 10,000 users. Thailand is ranked eighth on the Global Crypto Adoption Index by analytics company Chainalysis.