11 July 2024

The Pheu Thai-led government will consult the Bank of Thailand over the proposed use of the Utility Token Type 1 as a means of payment for the Pheu Thai party’s “digital wallet” scheme.

An informed source in the party said that it is now obvious that utility tokens, which are used to access a particular product or service within a blockchain-based ecosystem, are likely to be used as a means of payment for the “digital wallet” scheme. Since such tokens are not accepted by the central bank as a legal means of payment for goods or services, certain restrictions stipulated in the Digital Assets Executive Decree will have to be amended.

The source pointed out that there is no need enact a new law, just an announcement from the Securities and Exchange Commission (SEC) will suffice.

The source also noted that to work out a blockchain ecosystem to support the “digital wallet” scheme is a time-consuming process and requires a large number of personnel. As such it may not be possible for the scheme to be launched within six months, because the system will require the KYC (know your customer) mandatory process of identifying and verifying the client’s identity when opening an account and periodically over time. In other words, banks must ensure that their clients are who they claim to be.

Each individual will be charged a 100 baht fee for the KYC process arrangement, said the source adding, however, that the KYC information will be beneficial for other applications in the future.

Spending from the “digital wallet”, which it is estimated to cost the taxpayer about 560 billion baht, will help stimulate the national economy, with the expectation that it will put as much as 1.68 trillion baht back into circulation, said the source.

Amornthep Chawla, assistant president of the research institute at CIMB Thai Bank, said he doubts he source or sources of the funds for the scheme and the efficiency of the management of the fund, even though the use of utility tokens is transparent and accountable.

Under the “digital wallet” scheme, every Thai national who is 16 and older will be eligible to receive 10,000 baht in digital money, expected to be in the form of utility tokens, to be transferred to their accounts to be spent within 6 months in stores for goods or services within a 4km radius of their residence. The sum cannot be converted into cash or used to settle debts.

According to Thailand Development and Research Institute (TDRI), the funding for the scheme is likely to come from tax collection in the 2024 fiscal year, which is expected to increase by 260 billion baht, increases in tax generation from economic expansion, estimated at about 100 billion baht, 110 billion baht from the state budget and about 90 billion baht from welfare budget.

Another option is for the government to borrow, as Thailand’s public debt ceiling is now estimated at 61.15% of GDP, according to the information for June, and the government can still borrow another 1.58 trillion baht, or up to 70% of GDP.