Thailand’s Financial Authorities Set to Limit the World’s First Tokenized Government Bonds

The Securities and Exchange Commission of Thailand has provided clarity on the regulations surrounding a new government-issued tokenized bond named the G-Token, as the nation aims to be a pioneer in facilitating state borrowing from the public through digital assets.

One of the primary conditions set by the SEC is that this new tokenized real-world asset (RWA) should not be utilized as a payment method, nor can it be traded in the same way as conventional cryptocurrencies, according to a report from May 27.

While cryptocurrency trading continues to thrive in Thailand, the central bank has prohibited the use of digital assets for transactional purposes since 2022.

G-Token: A Global Milestone

Unveiled on May 13, the G-Token is positioned to be the first government-issued digital token aimed at securing public funding to alleviate the budget deficit.

The government intends to launch $150 million worth of tokens through an ICO platform on July 25, with the Finance Ministry overseeing the registration process. Additional information regarding the interest rate, maturity, and collateral will be disclosed prior to the launch.

Access will be restricted to investors possessing digital wallets on authorized exchanges or through recognized securities firms.

“In contrast to government bonds or stocks, a G-Token does not represent a debt instrument, and thus it is governed by the Digital Asset Act instead of conventional public debt legislation,” explained Jomkwan Kongsakul, deputy secretary-general of the SEC.

Robust regulatory measures will be enforced, including rules against market manipulation and investor protections, with transfers outside or between exchanges being prohibited, as monitored by smart contracts.

“Our objective is to ensure that the G-Token acts as an effective, technology-driven investment tool rather than a mere speculative asset,” stated SEC secretary-general Pornanong Budsaratragoon.

The securities regulator in Thailand announced intentions to implement a tokenized securities trading system aimed at institutional investors in February.

Prospects for Cryptocurrency in Thailand

Recently, there has been a notable influx of new digital asset trading platforms in Thailand, with Binance, Upbit, and KuCoin entering the market alongside the industry leader, Bitkub.

Bitkub currently leads the market with a daily trading volume of $44.5 million, with the most traded pair being USD/THB, according to data from Coingecko.

However, accounts on these cryptocurrency exchanges are exclusively available to Thai nationals, leaving many expatriates and foreigners residing in the country without access, despite Thailand’s ambitions to become a hub for digital nomads and cryptocurrency activities.

Additionally, Thailand had been considering a pilot program for cryptocurrency payments aimed at foreigners on the resort island of Phuket, but no developments have taken place six months following the initial announcement.