Thailand will launch a new scheme on Monday, August 18, to allow foreign visitors to convert cryptocurrency into Thai Baht for payments within the country.

The initiative called “TouristDigiPay” is a direct response to a significant slowdown in tourism, primarily due to a decline in tourists from China, on which the country relies heavily, according to The Nation.

Tourism momentum is weakening, reported the Bangkok Post last week, citing stiff competition from neighbouring countries offering visa exemptions, rising local prices, and border conflicts between Thailand and Cambodia.

Thailand also planned a pilot scheme on the tourist island of Phuket that would enable tourists to spend Bitcoin, but it has yet to materialize.

Not as Simple as it Seems

Currently, it is virtually impossible for tourists to access Thai banking or online payment platforms, and using digital assets to pay for goods and services directly remains outlawed by the central bank. Meanwhile, the country is pressing ahead with its ambitions to become a cashless society.

The new program, which is only available to temporary visitors, will operate within a regulatory sandbox to ensure proper oversight and risk management, “particularly to prevent the direct use of digital assets as a means of payment,” the report noted.

Additionally, those wanting to use the new crypto-to-fiat conversion system must open a local account with a Thai SEC and central bank-regulated “digital asset business and an e-money provider.”

Stringent Know Your Customer (KYC) and customer due diligence checks will also be required, and this may be the kicker.

The uptake of such a scheme may be muted as very few holidaymakers are likely to want to jump through KYC hoops and divulge sensitive financial information to access a foreign app and trust it with their crypto assets.

The central bank is also developing a “tourist wallet” e-money service, but this will have transaction limits and can only be used at government-approved outlets.

Tax-free Crypto Trading

In June, the Thai government approved a five-year tax break on crypto profits for local traders, in an effort to bring more finances onshore. The move came amid dwindling foreign inflows following a sweeping tax crackdown on remitted foreign income the previous year.

The Thai Revenue Department also confirmed that it was working on implementing a Crypto-Asset Reporting Framework (CARF), which enables the automatic exchange of customers’ digital asset and account information globally.

Despite not being able to use crypto for payments, trading remains popular in the Kingdom with several large exchanges, including Binance, KuCoin, and Upbit, recently opening branches in Thailand.