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Weekly Report: Thailand, Honduras and Malaysia mull over crypto adoption as Ireland and UK regulators clamp down on ads

  • Honduras' central bank has denied any plans of adopting a Bitcoin legal tender
  • The Thai SEC cites risks to financial and economic stability as the reason why it has banned crypto payments
  • The Central Bank of Ireland warns against the "risky and speculative nature" of crypto and the aggressive promotion/ ads coming with it
  • The Bank of England says the Ukraine situation has made it even more essential to establish effective policies frameworks around crypto
  • Malaysia's ministry of finance stands firm against the idea of legalising crypto, says the country will focus on a CBDC instead

This week, the focus has been on crypto regulation, with authorities and market regulators around the world making statements in that regard. Here are the details:

Honduras central bank dismisses rumours about a Bitcoin legal tender

Earlier this week, rumours were rife that Latin American country Honduras was keen on following the steps of its neighbour, El Salvador, in embracing the leading digital asset, Bitcoin, as legal tender. Word going around was that President Xiomara Castro had it in consideration to make this move to escape "the dollar hegemony."

However, as per a Wednesday statement, the Central Bank of Honduras (BCH) said that "for the time being" Bitcoin remains unregulated and thus is not recognised as legal tender. The BCH further explained that constitutionally, the central bank is the only entity allowed to issue legal tender and banknotes.

Honduras' chief bank insisted that it "neither supervises nor guarantees" the use of crypto to complete payments and warned of the risk of engaging in digital assets transactions.

Rather than a BTC legal tender, the BCH is exploring the feasibility of a central bank digital currency (CBDC). The bank added that if "the study and conceptual, technical and legal analysis" would eventually lead to implementing a CBDC, then said digital token would be regulated and accepted as legal tender in the country.

It remains to be seen if Honduras will be the next Latin American country to board the Bitcoin legal tender train or regulate digital assets.

Thai SEC outlaws the use of virtual assets to complete payments

The Thailand Securities and Exchange Commission is worried about the rapid growth of digital assets in the country, specifically their use to complete payments for goods and services.

According to a Wednesday announcement, the regulator has banned crypto payments, which comes after it said in January that plans were in place to establish regulatory guidelines for digital assets payments. Then bank was keen to insist that this is not a ban on trading crypto and digital assets.

The Thai regulator explained that the decision came of discussions with the Bank of Thailand (BOT) on the necessity to regulate the said use case of digital assets as it could affect the nation's financial and economic stability.

The SEC also showed concern over the lack of consumer safeguards, the price volatility, the risk of money laundering and cyber thefts, all synonymous with digital assets.

With the ban set to become active on 01 April, virtual asset service providers will have a period of 30 days from the set date to ensure compliance with the directive. Crypto solutions firms will not be allowed to promote or publish adverts on crypto payments afterward. Last June, Thailand banned the trading of social tokens, NFTs, and meme-based coins.

Ireland mirrors the UK ASA's warning against irresponsible crypto ads

On Tuesday, the ASA sent out a notice to 50 firms in the UK, warning that they review their crypto advertisements to march compliance requirements by 02 May, lest they face "targeted enforcement action."

Ireland was seemingly also travelling a similar route, as it has warned the public not to fall victim to enticing crypto advertisements, which are largely synonymous with influencers on social media platforms.

As per a press release published Tuesday, Director General of Financial Conduct at Central Bank of Ireland Derville Rowland explained that there has been an increasing frequency of "advertising and aggressive promotion" for digital asset investments, not just in Ireland but also in the larger European Union.

She asked Irish citizens to remember investments in this asset class are not regulated thus not protected. They, therefore, ought to invest just what they can afford to lose despite the high return such ads promise investors.

Bank of England begins structuring a regulatory approach for crypto

The Bank of England's Financial Policy Committee (FPC) on Thursday made the first major move towards achieving a fully regulated environment around crypto assets in the UK. According to a published statement, the BoE intends to set the foundation necessary to move to the next step in policy and regulation in the sector.

To start with, the BoE set a 03 June deadline for local banks to submit their responses to a survey. The inquiry seeks to determine what stage local banks are in terms of their current exposure to the crypto space and their planned endeavours.

England's premier bank also insisted that even though this space is still rather small, its displaying signs of a burgeoning future, hence the need to regulate. The bank added that though it remains unlikely that Russia onboards cryptocurrencies to evade the weight of the enacted economic sanctions, this whole situation has made it even more prudent to establish "effective public policy frameworks" in this scene.

To regulate, the laws existing for other financial services would be stretched to reign over crypto financial services of similar functionality, in what the FPC termed as "equivalence." On stablecoins, the bank said it would continue working with the Financial Conduct Authority (FCA) to explore a regulatory structure for systemic stablecoins next year.

Deputy Finance Minister opposes legalising crypto in Malaysia

The debate of cryptocurrencies legalisation in Malaysia is a hot ball getting kicked from one end to the other.

The most recent remarks on the subject have come from deputy finance minister I Mohd Shahar Abdullah, who said during a Thursday parliamentary meeting that crypto bears specific limitations that prevent its use as a payment method, meaning the price volatility risks and the danger of cyber threats associated with it.

Abdulla explained that rather than embrace crypto payments, Malaysia would continue on a path towards developing a CBDC.

The deputy finance minister's comments came barely a few days after the deputy minister at the Malaysian Ministry of Communications and Multimedia Zainul Abidin proposed the legalisation of certain use cases of crypto assets and NFTs.

The communication ministry official explained that making these assets legal could especially encourage participation by the country's younger generation.

Notably, Malaysian news agency Bernama had initially said Abidin proposed to the Monday parliamentary session the adoption of Bitcoin as legal tender but later changed to report that he had shown support for crypto mining activities and NTFs.

Worth bearing in mind, deputy finance minister II Yamani Hafez Musa said in early March that crypto wasn't accepted as legal tender since it does not display the characteristics of money.

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