BOT Issues Updates on Blockchain Projects and Rules on Digital Assets
The Bank of Thailand (BOT) announced updates on the electronic letter of guarantee (e-LG) project on blockchain under the BOT Regulatory Sandbox, published test results of mBridge project on central bank digital currency, and issued circulars on supervision of digital assets.
Below are the key highlights of the recent updates:
- BOT announced that the electronic letter of guarantee (e-LG) project on blockchain technology under the BOT Regulatory Sandbox has been tested and is ready to serve a wide range of services. Project e-LG on blockchain was born from the cooperation of Thai commercial banks through the establishment of the BCI (Thailand) Company Limited to amend the restrictions on the provision of Letter of Guarantee (LG), which was originally issued in paper form. The paper form took long time and was prone to fraud easily. BCI has applied blockchain technology that has the advantages of transparency and protection against hacking to make transactions through online channels of BCI member banks, which helps reduce the LG request period from 3-7 days to less than 1 hour, demonstrating that enterprise customers could manage LG more efficiently. Currently, there are over 100,000 letters of guarantee in the e-LG system, totaling more than THB 200 billion.
- BOT published test results of the mBridge project on the adoption of central bank digital currency (CBDC) for international funds transfer. It was found that international money transfers and exchanges on the mBridge system with the CBDC can increase the efficiency of international money transfers compared to today's systems. The mBridge system helps reduce the time of international money transfers to digits of seconds (from an average of 3-5 days), reduce the cost of money transfer transactions, reduce settlement risk, and facilitate the use of local currency for payments. Going forward, the mBridge project will continue building and testing the technology to improve existing functionalities and add enhanced features to the platform, all the while taking into consideration policy, regulatory, and legal implications.
- BOT issued a circular on supervision of financial business groups of commercial banks that conduct business and transactions on digital assets. The purpose of this regulation is to enable financial business groups to gradually conduct business and transactions related to digital assets under a flexible regulatory framework with good governance. The circular addresses supervision of capital adequacy risks associated with intra-group connections as well as the oversight and management of other related risks.
Related Links (in Thai)
- News on e-LG Blockchain Project
- News on mBridge Project
- Circular on Supervision of Digital Assets
- Rules on Digital Asset Business and Transactions (PDF)
Keywords: Asia Pacific, Thailand, Banking, Regulatory Sandbox, Regtech, Blockchain, CBDC, Digital Assets, Suptech, BOT
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