Summary
- Thailand is one of the world’s most crypto-friendly nations, and ranks 10th globally in terms of adoption.
- The country was one of the first to regulate crypto, and has learned lessons from the collapse of South Korean cryptocurrencies, Luna and Terra; as a result, Thailand continues to introduce regulations designed to protect the user while allowing the sector to develop.
- With the advent of a pro-crypto premier, the sector looks set to flourish, potentially developing into a global digital asset hub.
- Read other Crypto in Action articles.
How is crypto used in Thailand?
It is possible to buy crypto in Thailand. The authorities approved Bitcoin, Ethereum, Ripple and Stellar as cryptocurrencies that can be traded in Thailand.
As of March 2022, cryptocurrencies are no longer legal tender in Thailand. They are described as digital assets, which can be issued, traded and exchanged. As such, individuals can invest in cryptocurrencies as assets.
In 2022, approximately 12% of the population used cryptocurrencies, which became particularly popular during the COVID-19 pandemic; in 2021, Bitcoin’s value rose to what was then an all-time high of Baht 2 million. At the time of writing, it was valued at Baht 2.6 million. Thais were also attracted to NFTs during this period, registering the highest number of NFT users globally in 2021.
In terms of digital asset exchanges, Thailand has more than 2.94 million user accounts, which represents 4.27% of the population and more than one-half of its stock market’s 5.5 million accounts.
In terms of trading cryptocurrency, Tether is the most popular, accounting for more than 40% of the market, followed by Optimism and Perpetual Protocol.
Financial institutions, including banks, have been quick to adopt Web3 technologies, bringing broader acceptance of crypto (and blockchain) into business.
What is the government’s attitude/approach?
The government is supportive of crypto and is looking to the sector to help stimulate economic growth. The effects of COVID-19 on tourism – an important revenue earner – coupled with a slowdown in exports, have undermined GDP growth. The economy grew just 1.9% in 2023.
Alongside this, the authorities are looking to develop a regulatorily sound, welcoming digital environment to make Thailand attractive to investors and start-ups.
As such, the authorities are supportive of cryptocurrency in that it diversifies the ways in which Thai business can raise capital. At the same time, however, there remains wariness about the sector’s effect on the nation’s financial stability and the wider public.
Important changes to crypto taxation in Thailand
An important change came into effect in January, when the Finance Ministry announced that digital asset trading would be exempt from value-added taxation (VAT). There had been a temporary exemption on this 7% tax, but the authorities decided to scrap it altogether to help boost the crypto sector with the intent on making the country a digital asset trading hub.
How has a pro-crypto Prime Minister changed the dynamics of crypto in Thailand?
Thailand has a history of supporting digital currencies, not just crypto. The country has participated in CBDC pilots, including as a founding partner in the mBridge project. This
involves experimenting with a platform that uses many CBDCs to enable cross-border payments.
The Central Bank, the Bank of Thailand (BoT), has expounded the benefits of a retail CBDC, arguing that it provides financial service providers with an opportunity to develop their financial services; helps accommodate financial innovation and private-sector technological development; and protects the balance between private- and public-sector financing.
In 2018, the BoT unveiled Project Inthanon, designed to develop Thailand’s financial infrastructure to accommodate the use of a CBDC. In the same vein, Project Bang Khun Phrom, which ran from 2022 to Q3 of 2023, sought to assess the safety and effectiveness of a CBDC on the stability of the country’s financial system.
Businessman Srettha Thavisin has boosted the focus on crypto. He became Thailand’s 30th prime minister in August 2023, ushering a pro-crypto stance into the administration. During his election campaign, Srettha pledged to give Baht 10,000 (approximately $280 at time of writing) through digital wallets to every Thai citizen aged 16 and above. The money would be valid for six months, accessed through national identity cards, and had to be used within four kilometers of the recipients’ home.
In November, it was announced that the scheme had been delayed until May because of funding issues. Srettha also faced questions over whether or not it was cryptocurrency, and assured critics that it was a digital wallet underpinned by the Baht and backed by the government.
Stumbling blocks and questions about whether this is just a different way of trying to boost domestic spending aside, Srettha’s pro-crypto approach and changing regulatory environment have prompted businesses to take a growing interest in the country.
In December, Binance announced a partnership with Gulf Innova to open Binance TH. This aims to give the Thai general public full access to the crypto exchange, and it’s the first time the company has been granted a license in the region.
Increasingly, financial institutions, including the country’s largest banks, including Siam Commercial Bank, are looking at the opportunities in the sector, thereby helping to support crypto’s development.
How is Thailand approaching crypto regulation?
The Thai authorities were among the world’s first to introduce regulation into the crypto sector, therefore their approach to crypto regulation is cautious but supportive. The failure of South Korean cryptocurrencies, Luna and Terra USD, had a significant impact on Thailand and Thai investors, and subsequently, the government has been active in warning its citizens about the sector’s risks.
It is the role of the Thai Securities and Exchange Commission (SEC) to monitor businesses in the digital asset sector. Those looking to develop must ensure that their plans align with its
digital assets. To operate crypto exchanges must obtain licenses from the Thai SEC, and can only trade cryptocurrencies that the SEC lists. Under local law, digital asset operators are classified as financial institutions and must comply with relevant AML and terrorism financing regulations.
It is the responsibility of digital asset operators to protect investors. As of July 2023, they must issue a trading risks disclaimer, which customers must acknowledge before they can use the services offered.
Mirroring South Korea – another rapidly developing market for crypto – Thailand opted against allowing spot Bitcoin exchange-traded funds (ETFs) in a move designed to protect both the local financial market and investors. In March, however, the Thai SEC announced an exception, allowing asset managers to make these types of investment on US exchanges on behalf of institutional investors and very high-net-worth individuals.
Thai regulators are hard on offenders. In January, the Thai SEC ordered Singapore-based cryptocurrency exchange, Zipmex, to suspend its digital asset trading and brokerage services when it failed to satisfy requirements by the given deadline. As a result, the SEC has proposed to withdraw the exchange’s digital asset business license.
Regulation timeline of crypto in Thailand
2018
In May, digital tokens were branded digital assets under the Royal Decree on Digital Asset Business.
The BoT allowed banks to establish branches to invest in or issue cryptocurrencies.
2020
The BoT entered the third phase of the development of a Retail Central Bank Digital Currency (CBDC) and had started using it for financial transactions with some large businesses.
2021
The BoT announced in March that it would regulate the foreign currency-backed, asset-backed and algorithmic stablecoins that it had approved. All others remained unregulated, leaving investors unprotected against loss.
In September, the Anti-Money Laundering Office (AMLO) required local digital exchanges to verify customer identities through a ‘dip chip’ machine. This involved customers being physically present to register before they could open a cryptocurrency account.
2022
As of April, a ban on crypto as a means of payment came into force. Thai citizens could still, however, invest and trade in digital assets. The authorities said that digital assets were threatening the wider economy and nation’s financial system.
The SEC shelved its plans to impose a minimum annual income on crypto investors. It had proposed a figure of Baht 1 million. Instead, physical ID checks on crypto investors were introduced, along with license registration for crypto fund managers.
Strict rules were introduced on crypto promotion and advertizing in September.
2023
In May, the SEC further revised the resolution related to risk warning disclosures.
In July, the Thai SEC unveiled new regulations, including a ban on crypto exchanges offering lending services that provide returns to investors for their deposits.
As of 31 July, it became incumbent on crypto exchanges to warn customers of the risks associated with cryptocurrency trading.
2024
In January, the Finance Ministry removed the 7% VAT on earnings from cryptocurrency and digital asset trading. It was announced that regulators were also in the process of amending the Securities and Exchange Act to align digital investment tokens with securities.
The Thai SEC updated its digital asset market framework, removing retail investors’ limits for tokens backed by physical assets (e.g. real estate). There had been a Baht 300,000 cap on these.
Also announced was that dedicated entities be set up for custodial wallet management. Providers must now be subsidiaries of publicly listed companies and have extensive custody experiences. This is designed to prevent conflicts of interest if the firm has common shareholders with its digital asset business.
The Finance Ministry and Thai SEC are also in the process of amending the Securities and Exchange Act 2019, to align digital investment tokens with securities.
Outlook for crypto in Thailand
Thailand has embraced crypto, but also learned valuable lessons about the sector’s risks. Its accommodating but cautious approach seeks to find the balance between allowing the sector to develop while also protecting investors and the wider economy.
As a result of this policy, Thailand is emerging as a key jurisdiction for offshore digital asset investors. The measures announced in January, particularly the conducive taxation situation, can be expected to help develop this further.
