The Bank of Thailand declared Bitcoins illegal on Monday, making it the first country to ban the virtual currency.
According to an online statement by Bitcoin Co. Ltd., which facilitates the trading of the currency, the ruling came after months of meetings between the company and Thailand’s central bank. Thailand’s Foreign Exchange Administration and Policy Department ultimately decided on the ban “due to lack of existing applicable laws, capital controls and the fact that Bitcoin straddles multiple financial facets.”
Essentially all activities involving Bitcoins have been rendered illegal, including buying and selling Bitcoins, using Bitcoins to buy or sell goods online, and sending or receiving Bitcoins from outside the country.
However, it is unclear if the ruling amounts to an official policy. As both GigaOm’s David Meyer and The Next Web’s Jon Russell note, the announcement came via Bitcoin Co.’s shutdown notice, while the Bank of Thailand itself has yet to make an official statement. They also point out that the central bank does not have the power to make laws, as this falls under the duties of the Ministry of Finance. Furthermore, the actual enforcement of the ban seems virtually impossible, as the use Bitcoins is inherently anonymous.
Still, it seems that Bitcoin Co. has heard the call of the central bank, suspending all operations until further notice.
Bitcoins were created in 2008 by an unknown developer as a form of peer-to-peer currency, the Guardian notes. They are not issued by a central bank and are created through a series of complex algorithms in a process known as mining. Supporters argue that their anonymity allows for greater protection from identity theft and credit card fraud when used for online shopping, while critics say that Bitcoins’ covert nature lends them to money laundering and the exchange of illegal drugs and goods.
Last week, the SEC warned investors about the potential for fraudulent scams involving the virtual currency after busting a man in Texas for running a Ponzi scheme through his Bitcoin fund. And back in May, federal prosecutors shut down Liberty Reserve, a Costa Rica-based online currency exchange established in 2006 that counted criminals among its biggest clients and allegedly laundered $6 billion across millions of transactions and customers worldwide.
Richard Weber, head of the IRS’s criminal investigation department, told the New York Times that the Liberty Reserve case is indicative of a new “cyber age of money laundering,” facilitated by the secrecy of virtual currency.
“If Al Capone were alive today, this is how he would be hiding his money,” Mr. Weber said.
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