The new regulations cover three requirements:
 
1) Policy and guidelines for "overseeing the risk management of digital wallets and keys" (defined as a cryptographic key or any other data that must be kept confidential in order to be used for approval of transfers or transactions related to digital assets in digital wallets), as well as communication to "clarify such policy, action plans and procedures, work supervision and internal control to ensure compliance with the policy."

2) Policy and procedures for "designing, developing and managing digital wallets as well as creating, maintaining and accessing keys or other related information appropriately, securely and safely."

3) Contingency plan should an event occur that may affect the management system of digital wallets and keys. This includes "laying out and testing action procedures, designating responsible persons and reporting the event. An audit of system security is also required as well as digital forensic investigation in case of any event affecting the security of systems related to digital asset custody, which could cause significant impacts on clients’ assets." 

The regulations came into effect on 16 January 2023. Digital asset business operators that had provided custody of clients’ assets prior to the effective date of the regulations are required to fully comply within six months from the effective date.  

In the press release announcement, the central bank said "the BOT deems it necessary to extend the scope of Retail CBDC development to a Pilot phase in which real-life application of Retail CBDC will be conducted in cooperation with the private sector within a limited scale. The BOT will assess the benefits and associated risks from the Pilot in order to formulate related policies and improve the CBDC design in the future."

The Pilot will be separated into two tracks:

Foundation track will "assess the system’s efficiency and safety including the technological design." During this phase, CBDC will be used in conducting cash-like activities, such as paying for goods and services, within limited areas and scale of approximately 10,000 retail users selected by the BOT along with three companies. This phase is expected to begin at the end of 2022 and last until mid-2023. 

Innovation track will focus on "programmability which will facilitate the development of innovative use cases for CBDC, resulting in new financial services for a wide range of customers."  The private sector and the public will be able to participate in presenting business use cases for Retail CBDC via a "CBDC Hackathon". Those who wish to participate in the Hackathon can apply during 5 August – 12 September 2022. Selected participants will receive mentorship from experienced financial institution participants from Project Inthanon.

The central bank reiterated that it does not plan to issue Retail CBDC as "the issuance requires thorough consideration of benefits and associated risks for the financial system."

A prototype of multiple central bank digital currencies (mCBDCs) developed by the Bank for International Settlements Innovation Hub and the four central banks demonstrated the potential of using digital currencies and distributed ledger technology (DLT) for delivering "real-time, cheaper and safer cross-border payments and settlements".

According to the report, the enhanced prototype has the potential to offer various benefits to the participating central banks, including the ability to "manage the liquidity of their CBDC on the prototype, monitor the flow and the balances of their issued CBDC, enhance the level of privacy of the transactions, and automate certain compliance functions. Compared to the existing correspondent banking model, the prototype could substantially speed up cross-border transfers and reduce their costs."

Phase 3 of the mBridge project will involve "further experimentation with design choices and technology trade-offs and a future roadmap from prototype to a production-ready network that can serve the broader central banking community as a public good through open-sourcing."

A blockchain corridor network was developed to allow the 10 participating Hong Kong and Thai banks to conduct fund transfers and foreign exchange transactions on a peer-to-peer basis, which helps reduces transactions layers.

The authorities said that the project was successful and confirmed the technical feasibility of implementing practical solutions to address key pain points of cross-border payments, including inefficiencies, high cost, limited traceability and complex regulatory compliance.

Leveraging on smart contracts, the cross-border funds transfer process is enhanced to a real-time and atomic payment-versus-payment (PvP) manner.

The report said:

"The cross-border funds transfer process is enhanced to enable real-time transfers and atomic [payment-versus-payment] settlements. Leveraging smart contracts, funds transfers, and foreign exchange transactions are bundled together. The corridor network is designed to enhance banks’ foreign currency liquidity management, adopted the liquidity saving mechanism for multiple currencies and incorporated compliance to local regulations where possible."

The project, which was completed in December 2019, follows on the memorandum of understanding the HKMA and the BOT signed in May 2019.

The BOT announced a CBDC project called "Inthanon", whose first phase is to be completed by March 2019.

The BOT said that it had partnered with eight of the country's largest banks to create a CBDC based on Corda, a distributed ledger technology developed by technology firm R3.

The aim of the exercise is to explore the implications and potential benefits of blockchain technology "to enhance efficiency of the Thai financial market infrastructure".

The BOT added that the out outcome and insights from the project will contribute to the design of the country's future financial market infrastructure.

During the first phase of the project, participants will work on developing and testing "a proof-of-concept prototype for domestic wholesale funds transfer by using wholesale CBDC", after which the BoT will publish a project summary.

"Key payment functionalities such as liquidity saving mechanism and risk management will also be developed and tested during this phase," the BOT added.

Building on first phase, participants then aim to further develop the capabilities of the prototype for broader functions, including third-party funds transfer and cross-border funds transfer.

The BOT noted that project Inthanon is in line with similar projects started by other central banks, such as the Bank of Canada, the Hong Kong Monetary Authority and the Monetary Authority of Singapore.

The BOT also said that it is conducting another DLT proof of concept for scripless government savings bond sale to improve operational efficiency.

The eight banks participating in the project are: Bangkok Bank Public, Krung Thai Bank, Bank of Ayudhya, KasikornbankPublic Bank, Siam Commercial Bank, Thanachart Bank, Standard Chartered Bank and The Hongkong and Shanghai Banking Corporation.