Can Crypto Save a Slowing Thai Economy?

Thailand's crypto scene is rapidly evolving, boosted by encouraging government support. 2024 is set to be a recovery year for Thailand's economy. Last year, growth was reportedly dampened by shrinking and fiscal consolidation.

Economic growth is projected to rise from 2.5% last year to 3.2% this year, and 3.1% in 2025. The World Bank said in its semi-annual Thailand Economic Monitor that this recovery will be supported by tourism and goods exports as well as sustained private consumption.

With economic growth targets in sight, can a focus on crypto further help Thailand achieve its goals?

Also, read on for special discount codes for Money 20/20 Asia, and Onchain 2024, both taking place in Bangkok in April!

Thailand's No-Tax-Land

In a push for Thailand to become a digital asset hub, the country's Finance Ministry has announced the exemption of value-added tax (VAT) on digital asset trading.

Paopoom Rojanasakul, secretary to the finance minister, said the ministry intends to promote digital assets as an alternative means of fundraising, as well as to support Thailand's digital economy.

A 7% VAT was previously levied on earnings from cryptocurrency and digital token trading. The new waived VAT rules came into effect on 1 January 2024. Transferring digital investment tokens to a third party was already VAT-exempt but this has been now extended to brokers and dealers supervised by the Securities and Exchange Commission (SEC).

The Finance Ministry and SEC are also amending the 2019 Securities and Exchange Act to align digital investment tokens with securities.

As Thailand has emerged as a leading jurisdiction for offshore digital asset investors, these new tax measures could potentially stimulate further growth in the country's digital asset market. However, Mr. Paopoom emphasized the government's responsibility to ensure the stability of the financial system while harnessing its developmental potential.

South Korea is also considering similar initiatives. Jeong Jung-hoon, deputy minister of the tax and customs office for South Korea’s Ministry of Economy and Finance, said that the National Assembly is weighing up abolishing crypto asset gains from income tax for financial investments.

President Yoon Suk-yeol's administration intends to eliminate taxes on financial investments like stocks and funds to bolster the wealth-building and financial planning efforts of its citizens.

The new tax regime will start on 1 January 2025. Citizens with more than 2.5 million Korean won ($1,865) in crypto asset gains will be subject to a 22% tax. The government plans to submit an amendment later this month.

Limitless Potential With Some Limits

In January, Thailand's SEC published an update to its framework that fosters the growth of its digital asset market.

In the update, the SEC removed retail investors' limits for tokens backed by real-world assets (RWA) such as real estate or infrastructure. Previously, there was a 300,000 baht cap on offerings in asset-backed ICOs.

It aims to balance investor protection with raising funds for “national development.”

However, Thailand's regulators aren't exactly proposing a free-for-all in the digital asset space. Also its update, the SEC stated dedicated entities must be set up for custodial wallet management.

Such providers must be subsidiaries of publicly listed companies with extensive custody experience, to prevent conflicts of interest if the custody firm has common shareholders with the digital asset business.

One crypto firm that has remained firmly in the SEC's crosshairs is Zipmex. With a history of issues including delayed payouts, liquidity problems, police reports, and SEC investigations, the Singapore-based exchange has become the SEC's poster boy for what not to do.

Last week, the SEC ordered Zipmex to suspend its digital asset trading and brokerage services after the exchange failed to satisfy the regulators' requirements laid out on 12 January.

The SEC had ordered Zipmex to amend its liquid capital maintenance and management structure “to be appropriate and efficient" but concluded that “Zipmex was still unable to correct its financial position and operational deficiencies.”

Zipmex has 15 days from Friday to fix its financial position and satisfy the SEC's demands.

"In this regard, Zipmex shall submit the results of the correction to the SEC within 15 days from February 2, 2024,” the SEC announced. “Zipmex will be able to resume normal business operations upon receiving permission from the SEC.”

Zipmex already halted trading and deposit services and has been encouraging its customers to withdraw their assets.

The exchange faced liquidity issues due to its exposure to failed crypto lenders Babel Finance and Celsius Network, and has been working on restructuring plans ever since.

In 2023, Zipmex suffered a significant setback as V Ventures, its Thai buyout investor, canceled a US$100 million deal to rescue the company and return customer funds.

V Ventures has demanded a clawback of US$4.6 million it invested in Zipmex for working capital, dealing another blow to Zipmex’s 70,000 customer-creditors who were waiting for the return of their trapped crypto assets.

Crypto Thais the Knot

Thailand's crypto-friendly approach is attracting a slew of digital asset-related activity in the country.

Last month, Binance unveiled a crypto exchange in Thailand in partnership with Gulf Energy's subsidiary Gulf Innova.

The pair's joint venture, Gulf Binance, launches Binance TH's full operations in the country with access to the general public.

Gulf Binance secured digital asset operator licenses from Thailand’s Ministry of Finance in May 2023, marking Binance's first license in Southeast Asia.

The two firms first began this joint venture in 2022. Tapping into Binance's expertise in the field and the depth of Gulf Innova's local networks, its goal is to help locals explore the full potential of blockchain technology.

Gulf Binance aims to be the leading provider of crypto infrastructure services in Thailand and empower the local blockchain ecosystem to serve the users better.

Binance TH has implemented a dedicated orderbook designed for Thai baht trading pairs to allow users to buy and sell crypto with local currency pairing. Its orderbook is also integrated with Binance Kazakhstan to allow access to the digital asset brokerage service through Binance TH.

Richard Teng, CEO of Binance says the firm aims to be "part of the community that digitizes Thailand’s economy, facilitating growth and fostering new opportunities," describing the country as a "key player in the global digital finance landscape."

Onchain 2024

Meanwhile, Saison Capital, a Singapore-based venture capital firm and subsidiary of Saison International, has announced the inaugural launch of ONCHAIN 2024, marking Asia's first RWA conference.

Taking place on 26 April 2024, 9 am - 5 pm (ICT), in SO/Bangkok Hotel, Bangkok, Thailand, the event features an impressive lineup of speakers and attendees from TradFi institutions including Citibank, Standard Chartered, SCBx, Woori Bank, and SBI Holdings, as well as real-world asset (RWA) leaders including Helicap Group, Evertas, HELIX, D3 Labs, OpenEden and Rakkar Digital.

“The trend of tokenizing RWAs has gained momentum in 2023 despite depressed markets across traditional finance and crypto," said Qin En Looi, Partner at Saison Capital.

"The launch of ONCHAIN 2024 aims to bring more partners into the conversation to shape the financial ecosystem of the future."

Early bird tickets, priced at S$99, are available now. But as the exclusive supporting partner for ONCHAIN 2024, we've got an exclusive 20% discount on tickets for the Blockhead family. Simply use the promo code 'blockhead' at checkout to unlock this special offer.

Money 20/20 Asia

Money20/20 Asia is making its way to Bangkok this April! Rub shoulders with 3000+ of the greatest minds in the money ecosystem, from crypto and Web3 to fintech, startups, investors, and beyond.

Expect game-changing connections and boundary-pushing content from this year’s edition - over 120 speakers from companies like Bitkub (Thailand’s largest crypto exchange), Asia Crypto Alliance and BitRock Capital are already on board to talk about the future of money in Asia.

Because we’re a media partner of the event, you can save up to USD$300 when you register using the code BHD300 by 23 Feb at https://bit.ly/46jSw01.