THAILAND Law and Practice Contributed by: Wongsakrit Khajangson, Panupan Udomsuvannakul, Koraphot Jirachocksubsin and Pitchaya Roongroajsataporn, Chandler Mori Hamada
10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry Many Thai financial institutions, including the BOT, are keen on adopting blockchain technol - ogy. In 2020, the BOT launched a new blockchain- based platform for government bond issuance. This project is a collaborative effort with the Pub - lic Debt Management Office, Thailand Securities Depository Co, Ltd, Thai Bond Market Associa - tion and several selling-agent banks. In addition, certain commercial banks in Thai - land have adopted blockchain technology in order to develop their operations, such as moni - toring the correctness of financial transactions, cross-border transfers of funds, issuing bank guarantees and developing other aspects relat - ing to financial infrastructure. In 2022, the Letter of Guarantee on Blockchain (eLG) developed by BCI (Thailand) Co, Ltd passed the test under the BOT Regulatory Sand - box and was deemed ready for offering broad services aimed at serving not only financial insti - tutions or governmental sectors but also various business sectors – ie, petroleum, construction or automotive businesses. Currently, more than 170 organisations are utilising this service. PTT PCL’s Q-Bond, launched in October 2024, uses blockchain technology to manage bond payments through “Quarix” . This is the first initia - tive of its kind in the BOT’s regulatory sandbox. Blockchain technology streamlines bond trans - actions by cutting costs, simplifying procedures, and ensuring speed, completeness, and trans - parency. This showcases the potential of digital transformation to modernise Thailand’s capital
9.2 Contractual Terms to Assure Performance and Accuracy
The contractual terms of use of service provided by a third party may also be regulated, depend - ing on the type of business. Theoretically, certain functions that are not the main activities of finan - cial service providers (which normally require a licence, approval, or registration) can be out - sourced to a third party. For instance, pursuant to BOT Notification No SorNorSor 16/2563 Re: Regulations on the Use of Services from Business Partners of Financial Institutions, in order to use the services of a business partner, the financial institution must create guidelines on risk management and cus - tomer protection. Moreover, all strategic func - tions must be carried out directly by the financial institutions themselves. In addition, the financial institutions also have to submit an annual report to the BOT on the use of services provided by business partners that may cause significant risks to – or have an impact on – the public at large. With respect to IT outsourcing, financial institu - tions have to comply with third-party guidelines on risk management implementation. These cover issues such as risk governance, third- party risk management and reporting obligations to the BOT. Non-regulated contractual terms largely depend on the commercial issues and other regulations that may specifically apply to that financial insti - tution. Therefore, contractual terms must be negotiated and agreed upon on a case-by-case basis.
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