Is Thailand the next Southeast Asian Crypto Giant?
When you mention Thailand to the world, the first thing that will essentially come to your mind is tourism, lovely beaches and definitely vacations but the less known fact is that it is slowly growing to be a “crypto paradise”. Thailand has seen its perception for crypto being swayed from time to time but its mission is clear which is to integrate crypto as an incentive to boost its economy and its vast tourism industry. So let’s take a look at the development of Thailand’s regulation in the crypto space and the impact on the future.
Thailand’s Regulation Crypto Space
Thailand was amongst the first countries to regulate cryptocurrencies at a national level dating back to 2013 when Thailand central bank deemed that cryptocurrencies trading as illegal although that ban has since been removed a year later. Since then Thailand crypto space has grown over the years with transaction volume increased by about 600% from November 2020 to April 2021 and has roughly 10 times the number of active trading accounts as crypto powerhouse the United States.
Thailand also currently has more than 3.6 Million people who are cryptocurrency holders that represents almost 5.2% of its population, one of the highest numbers in Southeast Asia. As of 2018 the Thai Government has issued two Royal Decree for Cryptocurrencies and Digital Assets regulation. The first Royal Decree differentiates between cryptocurrency and digital tokens and also defines that all digital asset business will be under the provision of the Securities and Exchange Commission (SEC). Those business operators which are already engaging in digital assets business are required to apply for a license under the Royal Decree within 90 days after the Royal Decree becomes effective (i.e. by August 11, 2018). Once the application has been filed, such business operators are permitted to continue to operate until ordered to cease. Similarly, with respect to digital tokens issued prior to the date of the Royal Decree, the issuer must apply to the SEC for approval, in accordance with SEC regulations. With the second royal decree highlighting the tax regulation related to digital assets.
As of 2022 there are 8 crypto exchanges licensed by the SEC and one of them is Bitkub which is not only the biggest crypto exchange in Thailand but also sits in Top 10 globally in terms of average daily trading volume. It also rose to become the country’s first Unicorn after the 51% stake investment from Siam Commercial Bank, the country’s oldest bank. Siam Commercial Bank also sets up SCB 10x, a venture capital dedicated in funding CEFI, DEFI and BlockFI projects.
These investments are what we said before present a massive change from its anti — crypto stance in 2013 and although investments have started pouring into the space, banks still take a cautious approach in regard to digital assets. As recently in March of 2022 the Central Banks has told the commercial banks to limit their investment in digital-asset businesses, including crypto exchanges, to 3% of their capital. Any investment made in the industry should be through units to shield the confidence of depositors and the banking system. This was done to protect the banks from unforeseeable risk that crypto will impose and also limit their investment positions.
Also imposed recently in April 2022 were one the most important regulations that defines the position of the crypto space within the country, as the SEC has issued a ban on the use of cryptocurrencies and other digital assets as a payment system based on the study done by the Bank of Thailand which highlights risks like loss of value caused by price volatility, cyber theft, money laundering and personal data leakage of people and businesses. Memecoins and NFT were also banned earlier in 2021 but it still has not stopped Bitkub from releasing its fantokens and NFT project.
Despite all the Bans going around, Thailand’s main vision was how it can marry its strength in the tourism industry with the enormous potential that the cryptocurrency community can bring into the economy. As in 2022 the Thailand’s Minister of Finance noted that the transfer of cryptocurrencies and digital assets on government-approved exchanges would be exempted from VAT. This policy also includes investments on startups through VCs and the upcoming government issued CBDC.
“Tax relief for digital asset trading will help investors in digital assets to be comfortable in performing their legal duties. and get more fairness in paying taxes Including helping investors to trade digital assets that occur on Thai exchanges to be reliable, safe, and give people a choice in using digital money in the future.“ — stated Mr. Arkhom Termpittayapaisith, Minister of Finance
Impact on the Future
Thailand in its regulations has taken a clear approach on what is compliant and non compliant in terms of digital assets. Thailand has currently the second largest economy in Southeast Asia only behind Singapore and with 12% of its GDP being in the tourism sector, there is a clearly a lot of benefits in introducing a pro crypto approach.
Cryptocurrencies in Thailand are considered a commodity or an asset and not a method of payment so the Tax exemption rule will help a lot in attracting investors and traders who can take advantage of the tax shield. Like Binance recently, we will be able to see more top crypto players entering the country and develop the ecosystem of the crypto space that is already growing rapidly. But it will not do too much to attract digital nomads who live and breathe cryptocurrencies because they still have to use fiat money to make payments.
Of course, it will do so much help for more than 40 million tourists that visit Thailand every year if the ban on payments is lifted as not only they can make payments using cryptocurrencies but also don’t have to deal with the hassle of transferring money. This could also be solved with the use of the government-issued CBDC which will allow cross border payments although it is still on the trial period.
Thailand, like its stance on anti — crypto has reversed its regulation in order to facilitate and develop its crypto space. The government and the SEC have also remained committed to listen and discuss with the people in the space in order to provide a regulation that not only safeguard its user but also develop the space. So in terms of the Southeast Asian Crypto Space, Thailand will still remain behind Singapore and Vietnam but the growing pace and the upcoming regulations, expect them to be competing for the top spot anytime soon.
We in Nagaya Technologies Pte. Ltd are excited with the growth that is going in the Southeast Asia Crypto space. We hope that being a crypto asset founded and registered in this region, that the Southeast Asian Crypto Space could be dominating in the coming years. Which is why we developed Nagaya, the world’s first hybrid crypto asset that aims to revolutionize crypto space. For more information regarding on the latest updates on Nagaya and our whitepaper, you can visit us at nagaya.io
Or you can talk to us at t.me/nagayaofficial