After a week of bad news within the crypto world, a glimmer of hope for the market has come from a very unlikely country, Thailand. Recently, Thailand has announced a list of rules and regulations that are aimed at making crypto more mainstream and accelerate the switch to a digital economy. Thailand, an exotic holiday destination is not a nation that most people associate with cryptocurrencies. Yet, Thailand has a been a significant player in the industry, even attracting foreign companies and investment.
After receiving approval from the Thai government, Bithumb has announced in July that it will start operations in Thailand. Bithumb is the second largest cryptocurrency exchange in Korea. IBM, along with Krungsri, a large Thai financial institute, has decided to build out their digital banking offerings thus including blockchain technology. The value of the project is estimated to be about 140 million dollars over the next 5 years. Global players have started to take note of Thailand recently. The co-founder of ethereum, Vitalik Buterin was in Thailand to meet with the officials from Thailand’s Securities Exchange Commission to discuss the future of his platform and the OmiseGo token.
Crackdown on Cryptocurrencies
However, all is not well. In fact, Thailand has done a lot of crackdowns on cryptocurrencies early this year. This February, an order from the central bank of Thailand directing the country’s banks from dealing with companies that trade or work with cryptocurrencies was issued. As a result of this, both Bangkok Bank and Krungthai Bank ceased all business with the Thai Digital Asset Exchange (TDAX). TDAX, according to their Linkedin profile is a Digital Asset Exchange, a platform for buying, selling, transferring, and storing digital currencies. Thailand’s most popular Bitcoin Social Wallet was developed by a team led by the CEO of TDAX.
After the ban by the central bank, which is similar to the ban imposed by the Reserve Bank Of India early this year, TDAX was forced to stop issuing new ICOs, as it was rumored that ICOs made the Thai government turn against cryptocurrencies. In fact, crypto was already huge in Thailand by this point and had been relatively untouched by the government until now. The huge popularity of cryptocurrencies is what could have prevented a total crackdown on the entire industry as any restrictions could not be meaningfully implemented. Thailand’s volume of crypto trade is far greater than larger economies like Turkey and Argentina.
The new regulation deals with taxation, registration, and a penalty for failure of compliance. There will also be a 15 percent capital gain on cryptocurrencies and their trade. Also, all crypto related platforms will have to be registered with authorities. New rules also outline a fine of up to 500,000 baht (around $15,700) if token traders and sellers do not register with the Thai Security Exchange Commission (SEC) within 90 days of publishing this draft. Along with this, the Thai SEC permitted issuing new ICOs that are based in Thailand.
It also confirmed that seven companies, one of them being TDAX, were allowed to perform crypto-related businesses including exchanges. Banks are also allowed to handle and work with cryptocurrencies. For this, they will have to open subsidiaries dealing exclusively with cryptocurrencies. This might be to mitigate the risk in case of a meltdown in the market. Blockchain is entering into all spheres of life in Thailand. The Central bank is planning to use the technology to settle inter-bank transactions faster. Registration of bonds will also be done through a private blockchain. Ministries are preparing for a trial in the areas of copyright management, agriculture, and trade finance. In the future, Thailand’s central bank might issue a CBDC (central bank backed digital currency).
Going against the flow
The current worldwide crackdown has intensified against cryptocurrencies in general, so why is the Thai government going against the current? Thailand has been under a military dictatorship since May 2014 and its economy has taken a hit. Hence, the capital inflow that could come in if Thailand starts projecting itself as a crypto haven could really help the economy. There is a growing realization that regulated crypto can do more good than harm. For example, a public ledger where all transactions are recorded can help in curbing tax evasion completely.
Yet, no one should be in the illusion that Thailand is all in for crypto. Deputy Prime Minister, Wissanu Krea-ngam in early November, spoke of the need for more regulations. There is an increasingly assured and stable place for the crypto community to do business in Thailand, i.e, as long as they do not pick fights with the government. This could seriously impact the growth of the industry, as investors will be more willing to put money where there is regulatory oversight. This is a step in the right direction: regulation with the freedom to innovate, let the industry grow and take shape rather than a complete crackdown.