According to Bitcoin Co. Ltd, a Bangkok-based website that trades the digital currency, the firm had been in the process of registering with governmental agencies but the application was turned down and the currency has now been made illegal.
Bitcoin is a virtual currency that allows users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining.
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Thailand's central bank initially bypassed the Bitcoin Co. Ltd's money exchange license on the basis that bitcoin was not a currency, the exchange said. It was given the opportunity to present the merits of the currency to the central bank on Monday but was given news of the move to outlaw it shortly afterwards.
"At the conclusion of the meeting senior members of the Foreign Exchange Administration and Policy Department advised that due to lack of existing applicable laws, capital controls and the fact that bitcoin straddles multiple financial facets, the following bitcoin activities are illegal in Thailand," a statement on Bitcoin Co Ltd's website said on Monday.
The currency exchange said it has been told that buying and selling bitcoins is illegal, as well as sending or receiving the currency from other jurisdictions.
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"Based on such a broad and encompassing advisement, Bitcoin Co. Ltd. therefore has no choice but to suspend operations until such as time that the laws in Thailand are updated to account for the existence of bitcoin. The Bank of Thailand has said they will further consider the issue, but did not give any specific timeline," it said.
The Bank of Thailand, the country's central bank, was not immediately available for comment when contacted by CNBC on Tuesday.
Two other Thai bitcoin exchanges, Bahtcoin and Coinmill, both remained open on Tuesday.
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Bitcoin has attracted attention from regulators around the globe. In June, not-for-profit organization the Bitcoin Foundation was sent a "cease and desist" letter from California's financial regulator. In May, major currency exchange Mt. Gox from Japan made moves to placate regulators by altering its code of conduct after the U.S. government seized two accounts associated with the firm.
In the same month, an indictment was filed by U.S. prosecutors against a fellow alternative currency exchange called Liberty Reserve that accused the Costa Rica-based company of helping criminals around the world to launder illicit funds.
-By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81
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image: © Zach Copley