Thailand aims to become carbon trading hub with crypto-friendly regulations

Thailand’s SEC proposes regulatory amendments to boost carbon credit market. (Photo:iStock)

To stimulate its carbon trading market, the Thai government is revising regulations to relax cryptocurrency oversight. The proposed changes would allow the tokenization of carbon credits, carbon allowances, and renewable energy certificates using blockchain technology.

This move is expected to attract digital asset managers, brokerage firms, and traders to the market, reinforcing Thailand’s ambition to become a carbon trading hub.

New rules encourage crypto players to enter carbon market

Thai Securities and Exchange Commission (SEC) revised its utility token framework in August last year, excluding consumer utility tokens from regulatory oversight. This effectively barred digital asset managers from offering emission reduction-related tokens, as carbon credits, carbon allowances, and renewable energy certificates were classified as consumer utility tokens.

However, after reassessing the regulations, the SEC introduced a draft amendment in early March. In its statement, the SEC acknowledged blockchain’s potential to facilitate carbon markets and the green economy. The proposed regulatory changes aim to enable digital asset firms to participate, contributing to Thailand’s 2050 carbon neutrality goal while strengthening the country's leadership in sustainable finance. The amendment is currently open for public consultation.

Blockchain’s transparency and immutability are seen as valuable in reducing greenwashing concerns by enabling third-party monitoring and minimizing issues such as data duplication and poor-quality carbon credits. Additionally, lower token issuance and operational costs could increase developers’ willingness to launch projects and enhance the liquidity of carbon assets in trading markets.

Thai Securities and Exchange Commission believes blockchain technology can boost the carbon market and has proposed easing regulations to allow digital asset firms to participate. (Photo: unsplash)

Verra flags risks in blockchain carbon trading

Despite its advantages, blockchain-based carbon trading still faces risks. Carbon credit certification body Verra has expressed concerns that cryptocurrency platforms may not update carbon credit statuses in real time, potentially leading to retired credits being reused for token transactions. As a result, Verra banned the use of blockchain carbon credit tokens in 2022.

Thailand’s carbon credit market has long suffered from oversupply, leading to persistently low prices. In an effort to revitalize the sector, the SEC announced in January that it would launch a new carbon credit trading platform and plans to open a voluntary carbon market by 2027.

Additionally, in March, the Thai cabinet approved a carbon tax mechanism, incorporating carbon pricing into fuel and related product excise taxes at a rate of 200 Thai baht per ton (about 5.9 USD).

Furthermore, the SEC has partnered with Intercontinental Exchange (ICE), the world’s largest energy derivatives trading platform and the leading global carbon credit trading group. By leveraging ICE’s extensive experience in carbon markets across the U.S. and Europe, Thailand aims to establish a comprehensive trading platform and expand into emerging markets in Asia.

Source: Bangkok Post(1)、(2)、Taiwan Banker