The Bank of Thailand has issued a warning against buying virtual currencies including the bitcoin, saying they are not legal tender in the country.
Users risk not being protected in case of fraud or having the digital currency rejected as payment for goods, the central bank said in a statement.
"Tracking the virtual money's transfer could be difficult in cases where evidence is needed for any legal action. It is different from real money transfers through commercial banks or regulated money transfer service providers that have track records," it said.
The Bank of Thailand's alert came after central banks and regulators around the world ratcheted up warnings about the bitcoin in recent months.
Consumer interest in the bitcoin grew when online retailer Overstock.com Inc announced in January that it would accept the currency for purchases.
However, its price has been bumpy since the Tokyo-based Mt. Gox, once the world's dominant exchange for the virtual currency, filed for bankruptcy in Japan late last month, blaming hackers for the loss of 850,000 bitcoins worth more than US$550 million.
A smaller Canadian exchange also closed, saying hackers had stolen all its bitcoins. The apparent suicide of a young Singaporean chief executive after suspected involvement with bitcoin investment further tarnished the virtual currency.
In Thailand, Bitcoin Co resumed trading and selling in Thailand last month after a recent letter from the Bank of Thailand stated that Thai law did not govern the digital currency.
The exchange rate yesterday was 20,366 baht per bitcoin, almost a 579% gain from last July’s price of 3,000 baht.
The central bank's latest statement also warned that holders of the virtual money risk massive losses as its price is changing rapidly and is not linked to the country's economic fundamentals. The bitcoin's exchange rate is dictated by users and the currency will become worthless if no one wants to trade it any more.
Moreover, users risk their money being stolen by hackers as their track record evidence and data are available only in a computer system, the statement said.
Bank of Thailand spokeswoman Roong Mallikamas said the central bank is monitoring the virtual currency's trading situation in Thailand and it will coordinate with related agencies in case any suspected illegal actions crop up.