Thailand Crypto Market Research Report

Introduction

Thailand is a multi-ethnic nation and, as an outward-looking economy, exhibits a stark disparity in wealth distribution. The country is currently experiencing a decline in the value of its currency and a continuous economic contraction due to persistent low inflation. Since 2017, the adoption rate of cryptocurrencies in Thailand has been high. The government is actively implementing relevant regulatory policies, hoping to alleviate some economic development issues through the openness of cryptocurrency market policies. This creates a favorable market and policy environment for the rooting and development of the cryptocurrency industry in the region.

1. Macroeconomic Indicators and Current Situation in Thailand

Thailand is a middle power in global affairs and a founding member of ASEAN, with a high Human Development Index ranking. In terms of purchasing power parity, it is the second-largest economy in Southeast Asia and the 23rd largest in the world. In 2014, a report by Credit Suisse stated that Thailand was the third most unequal country in the world, trailing only Russia and India. The top 10% of its wealthiest hold 79% of the nation’s assets, and the total net worth of the 50 richest families amounts to 30% of its GDP. In 2016, Thailand ranked 87th in the Human Development Index and 70th in the Inequality-adjusted Human Development Index.

1.1 Geography and Population

The Kingdom of Thailand, commonly known as Thailand, has its capital in Bangkok. It is located in the central-southern part of the Indochina Peninsula, with the Gulf of Thailand to the southeast and the Andaman Sea in the southwest, bordering Myanmar to the west and northwest, Laos to the northeast, Cambodia to the east, and Malaysia to the south. Thailand has a tropical monsoon climate, and its terrain varies from highlands in the north to lowlands in the south. The country is divided into five regions and has a total of 77 provinces.

According to the latest United Nations data compiled by Worldometer as of January 2, 2024, the population of Thailand is 71,844,093 people. Urban population makes up 52.0% of the total population (37,322,064 people in 2023). Thailand’s population accounts for approximately 0.89% of the world’s total population. The country is home to over 30 ethnic groups, with the Thai people being the largest ethnic group, making up 40% of the total population. Other ethnic groups include the Lao, Chinese, Malay, Khmer, as well as various hill tribes such as the Hmong, Yao, Karen, Shan, and more. Over 90% of the population practices Buddhism, while the Malay community follows Islam, and there are also small minorities practicing Christianity, Catholicism, Hinduism, and Sikhism.

1.2 Economic Structure and Scale

Thailand is an emerging economy and is considered a newly industrialized country. It is the second-largest economy in Southeast Asia, after Indonesia. Its three major economic sectors are agriculture, manufacturing, and services. Thailand follows a policy of economic liberalism and is an export-oriented economy, heavily reliant on external markets such as China, the United States, and Japan. Agricultural products are one of Thailand’s primary sources of foreign exchange income.

In the 1980s, industries like electronics manufacturing experienced rapid growth, leading to sustained high economic growth. By 1996, Thailand was classified as a middle-income country. Thailand exports goods and services worth over $105 billion annually. Major export products include automobiles, computers, electronics, rice, textiles, footwear, fisheries products, rubber, and jewelry.

1.3 GDP Ranked 9th in Asia

According to official data from the World Bank, Thailand’s GDP in 2022 was $495.42 billion, accounting for 0.21% of the world economy, with a growth rate of 2.6%. It ranks as the ninth-largest economy in Asia.

Thailand’s economy heavily relies on exports, with exports accounting for more than two-thirds of the country’s GDP. According to a report by Bank of Thailand, during the period from 2006 to 2016, only 6% of companies in the country were engaged in the export sector, yet this sector contributed to 60% of the nation’s total income.

1.4 GDP per Capita Ranked 4th in Southeast Asia

In 2022, Thailand’s per capita GDP was $6,278.35, which is equivalent to 50% of the world average. From 1960 to 2022, the average per capita GDP in Thailand was $2,976.71. In 2019, it reached its historical peak at $6,453.89.

Thailand is ranked as having a medium level of wealth distribution in Southeast Asia. In terms of GDP per capita, Thailand is the fourth wealthiest country in the region, following Singapore, Brunei, and Malaysia.

1.5 Inflation Rate Continuously Below the Forecast Level

In December 2023, Thailand’s consumer prices declined by 0.83% year-on-year, marking the third consecutive month of deflation following a 0.44% drop in November. This also signifies the most severe deflation in 34 months and the eighth consecutive month of falling outside the central bank’s target range of 1% to 3%. The primary contributing factor was government measures leading to a decrease in energy prices, specifically electricity and gasoline prices.

The core inflation rate in December was 0.58%, unchanged from November, and the lowest level since January 2022, while it was expected to rise by 6%. The Ministry of Commerce stated that the inflation rate for 2023 was 1.23%, with forecasts for the year ranging from -0.30% to 1.7%. The monthly CPI decreased by 0.46%.

According to the expectations of Trading Economics’ global macroeconomic model and analysts, the inflation rate in Thailand is projected to be approximately -0.10% on a quarter-over-quarter basis by the end of this quarter. Looking at the long term, Thailand’s inflation rate is expected to be around 0.40% in 2024 and around 0.30% in 2025. In other words, unless the government takes strong measures to make changes, Thailand’s currency value may continue to decline, the economy may continue to contract, and this could lead to an increase in wealth inequality, all of which are likely to persist in 2024.

1.6 Fiat Currency

The currency of Thailand is the Thai Baht, with the code THB. It is the 10th most frequently used currency in the world and one of the strongest currencies in Southeast Asia. The Thai Baht has been gaining popularity among forex traders. Thailand’s strong economic fundamentals, including a healthy tourism industry and robust exports, contribute to the consistent performance of the Thai Baht.

The growing economy and the burgeoning middle class make Thailand an attractive destination for business. The central bank of Thailand is responsible for managing the Thai Baht, and its strong policies help maintain exchange rate stability.

2. Crypto Users and Market in Thailand

2.1 The Adoption Index Ranked 10th

Thailand has performed well in terms of civilian adoption and ranks 10th in the ‘2023 Global Cryptocurrency Adoption Index’ of Chainanalysis. According to the Global 2022 Digital Overview Report, Thailand is one of the countries with the highest proportion of cryptocurrency ownership among internet users worldwide.

2.2 Continuous Growth in the Proportion of Crypto Users

As of January 11, 2024, according to Statista.com, Thailand had 13.02 million crypto users as for 2023, which accounts for approximately 18.1% of the total population. It is projected that this figure, after continuous growth for the tenth consecutive year, is expected to reach 17.67 million users and reach a new peak in 2028. It’s worth noting that the number of users in the cryptocurrency sector of the fintech market has been steadily increasing over the past few years.

2.3 Young Males are the Core User Group

The data on cryptocurrency users in the Thai market is relatively limited, but according to a report by Datareportal in collaboration with Hootsuite and WeAreSocial in 2022, Thailand leads the world in terms of the proportion of internet users who own cryptocurrency, engage in online shopping, and purchase groceries online. A significant percentage of internet users in Thailand aged 16 to 64 own cryptocurrency (20.1%), making it the highest proportion globally.

• Cryptocurrency investors are predominantly male, accounting for 52.9% of the total number of investors. Cryptocurrency has become a popular investment option for people in Thailand.
• Approximately 75% of cryptocurrency investors are between the ages of 18 and 24, while only 1.1% of investors are aged 55 and above.

3. Preferences of Crypto Users for CEX in Thailand

According to the regulations of the Thailand Securities and Exchange Commission, there is a list of registered and licensed CEXs. The following exchanges are allowed to operate in Thailand:

3.1 Bitkub: A CEX Recognized by the SEC

Bitkub, located in the heart of Bangkok, has received official recognition from the Securities and Exchange Commission of Thailand (SEC) and enjoys an excellent reputation. According to data from Coingecko.com, Bitkub is Thailand’s largest cryptocurrency exchange, providing Thai Baht exchange services and holding a 75.4% market share in the country’s exchanges.

3.2 Zipmex: the Second-Largest CEX in Thailand

Zipmex, founded in 2018 in Singapore, is a cryptocurrency exchange catering to retail and institutional investors. Leveraging blockchain in Southeast Asia, it provides secure opportunities for investment, savings, and spending. According to Coingecko.com, the market share of Zipmex is 14.78% as of 2022 based on trading volume.

3.3 ORBIX: The Most User-Friendly CEX

ORBIX is the most reliable digital asset trading and exchange center, being Thailand’s leading regulated first digital asset exchange offering Thai Baht cryptocurrency trading services, allowing users to trade digital assets more securely.

3.4 The CEX Participated in by Bitazza Brokers

Bitazza is the third largest crypt currency exchange in terms of trading volume 8.52% market share according to Coingecko.com.Bitazza is a local digital asset platform in the ASEAN region, comprised of affiliated exchanges and brokers established across Asia, holding local operating licenses. Customers can directly access their respective personal brokers for their trading accounts (not just email and bots).

Bitazza provides easy access to local digital asset financial and custody services, as well as convenient and fast deposits, withdrawals, and conversions between local fiat-crypto-fiat assets.

3.5 Binance Operates Locally Through GulfBinance

Binance is the world’s largest cryptocurrency exchange by trading volume, with 172 million users. GulfBinance, a joint venture between Binance and Gulf, has obtained a digital asset operator license issued by the Ministry of Finance of Thailand. Its digital asset platform is regulated by the country’s Securities and Exchange Commission and commenced operations in Thailand in the fourth quarter of 2023. GulfBinance plans to advance the establishment of a digital asset exchange and digital asset brokerage in compliance with local regulatory standards.

3.6 Upbit: the South Korean CEX with Operational License

Upbit is another centralized crypto exchange allowed to operate in Thainland.. Upbit is a South Korean cryptocurrency exchange founded in 2017. It is operated by Dunamu, which is one of the highest-valued startups in South Korea. Upbit is licensed also in South Korea (48% market share), Singapore and Indonesia and is aiming to be one of the top centralized crypto exchanges in SEast Asia.

4. Web3 projects in Thailand

4.1 Token Unlocks: A Cryptocurrency Data Analysis Platform

Token Unlocks develops a token analytics platform that curates both on and off-chain data to offer an optimal user experience. Their services include structured and labeled on-chain and off-chain token data, along with customized on-chain monitoring for tracking token projects. This empowers traders to make informed investment decisions by accessing accurate token information and staying abreast of dynamic project changes.

4.2 GuildFi: A Gaming Guild Empowering Players

GuildFi is a gaming platform that empowers gaming player communities and creates interoperability across metaverses. It is backed by investors such as Coinbase Venture, Animoca Brands, and Pantera. They are building an infrastructure aimed at connecting players, guilds, and investors to accelerate game financing in the blockchain economy, from Play-To-Earn games to the Metaverse.

GuildFi features its own Treasury Zone, which includes subdivisions like Growth Funds, Development Funds, and Venture Funds. Additionally, it boasts a Tool Zone for users to track and analyze game-related data. While GuildFi may still have some ground to cover in terms of total volume compared to guilds like YGG, it does not fall short in terms of functionality and popularity. Its potential is significant.

4.3 Together.ai: A Decentralized Cloud Service Platform

Together.ai operates a technology service platform focused on providing decentralized cloud services for artificial intelligence. Their platform specializes in building large-scale, user-friendly, and open-source models. This facilitates researchers, developers, and companies in harnessing and enhancing artificial intelligence through an intuitive platform for data, models, and computation.

4.4 Token X: A Financing and Asset Tokenization Service Provider

Token X Co., Ltd., a subsidiary under SCBX, provides ICO Portal Services and Digital Asset Tokenization. The company aims to be a successful partner in tokenization, with its services encompassing tokenization consulting, blockchain technology development, and blockchain networking. Their clientele are corporation who are looking for funderaising solutions with more flexibility. ICO provides token issuer more options on the available options for the backing assets. The backing assets could range from traditional real-estate to rights and services.

4.5 3Landers: A Collectible NFT Focused on Adventure and Collaboration

3Landers is a collectible NFT project centered around community, adventure, and collaboration. Each 3Lander resides on the Ethereum blockchain as a unique, non-fungible token (NFT), composed of a combination of unique traits and underlying ‘DNA’.

Owning a 3Landers NFT makes you a member of the 3Lander world and community, a group dedicated to forging meaningful, long-term connections through collaboration, adventure, building, creation, and dreaming.

4.6 Bitkub Chain: Ethereum Fork Public Blockchain

Bitkub Chain is developed by Bitkub Blockchain Technology Co., Ltd., is a blockchain platform forked from Ethereum, sharing a comparable technology standard. The native token, Bitkub Coin (KUB), is listed on various exchanges.

The platform supports KAP-20 standard-based tokens like KKUB, KUSDT, KBTC, LUMI, DK, etc. Utilizing Ethereum-compatible data sets, Bitkub Chain enables easy development of Decentralized Applications (DApps). The platform boasts fast block validation and placement, taking only seconds, and maintains low transaction fees through the Proof of Staked Authority (PoSA) consensus algorithm.

5. Crypto VCs in Thailand

5.1 SCB 10X

In Thailand, traditional banks can participate in the crypto domain by establishing subsidiaries. SCBX (Siam Commercial Bank), operates within this framework through SCB10X. It is one of Thailand’s most successful crypto venture capital firms.

SCB 10X was established in 2020, with its headquarters in Bangkok, Thailand. It tends to invest in projects focusing on big data analytics, machine learning, blockchain, fintech, decentralized finance, and digital work and lifestyle. These projects span across the United States, China, Israel, and Southeast Asia. SCBX has also launched TokenX, a web3 project incubator. Their investment portfolio includes companies like Together.ai, Visai.ai, and Ai21.com.

5.2 KBTG

The Kasikorn Business Technology Group (KBTG) launched a $100 million fund, KXV, dedicated to investing in startups related to web3 and artificial intelligence. The fund is jointly overseen by Krating Poonpol, the chairman of KBTG Group, and Jom Vimolnoht, the executive director of KXVC.

The primary focus of the fund is to identify and support AI, web3, and deep tech fintech startups globally, with a potential emphasis on the Asia-Pacific region. In the realm of web3, KXVC is actively considering various tech startups, including those involved in innovative technologies like zero-knowledge proofs and liquidity-backed derivatives.

KBTG is the technology division of Kasikornbank (KBank), which is the second-largest bank in Thailand in terms of asset size.

6. Crypto Regulatory Framework in Thailand

6.1 The Development Process of Crypto Regulatory Framework

• In May 2018, the Emergency Decree on Digital Asset Business Operation came into effect, designating the Securities and Exchange Commission (SEC) of Thailand as the official regulator of all digital assets within the country. Parties involved in digital asset transactions were required to register with the SEC and obtain a business license.
• In June 2018, Thailand published digital asset regulatory guidelines, allowing investors to legally trade seven major cryptocurrencies and enabling ICO issuers to apply for the issuance and offering of digital tokens.
• In July 2018, the SEC issued standards for the operation of digital asset businesses. Under the decree, crypto enterprises operating cryptocurrency trading businesses in Thailand must obtain a digital asset business operation license from the Ministry of Finance.
• In August 2020, the SEC mandated strict adherence to KYC standards for crypto trading accounts, requiring crypto enterprises to set KYC levels to facilitate use by different types of customers.
• In February 2021, the SEC required crypto enterprises to comply with investor knowledge test standards, conducting knowledge tests for crypto users before providing crypto services, and denying services to those who do not pass the test.
• In May 2021, the SEC stipulated that DeFi projects involving digital token issuance must comply with regulations. DeFi projects operating in Thailand that involve issuing digital tokens to serve users must obtain a business license and adhere to the Digital Asset Decree.
• In August 2021, the SEC required crypto enterprises to protect platform user assets, demanding that platform customer funds require multi-signature authorization for withdrawals or transfers, and prohibiting the use of user funds stored on platforms for other purposes or depositing them in commercial banks for interest.
• In February 2022, the SEC amended advertising regulation principles, limiting crypto advertising to non-inducive promotions. Crypto advertisements must not be exaggerated, need to be clear and appropriate, and be published on official channels of crypto enterprises, not in other public areas.
• In March 2022, the SEC issued the Digital Asset Business Operator Service Standard Specification, requiring crypto enterprises not to use cryptocurrencies to pay for goods or services and avoid using cryptocurrencies as a means of payment to safeguard Thailand’s financial security.
• In December 2022, the SEC released a draft of the ICO Portal and Digital Token Issuance Regulatory Standards, refining the ICO portal supervision rules and principles related to digital token issuance.
• In March 2023, the SEC published the Overall Digital Asset Regulatory Policy, covering the entire cryptocurrency industry chain, including the issuance of primary market tokens and the operational supervision of secondary market exchanges.
• In November 2023, the SEC updated standards for debt-based ICOs and infrastructure supporting ICOs, adding new categories for debt-based and infrastructure ICO products. These types of crypto projects must have their credibility assessed and disclosed by ICO portals, including due diligence and property valuation.

From 2018 to 2023, Thailand’s cryptocurrency regulatory policies have undergone numerous refinements and updates, meticulously extending to every aspect of the crypto industry. This includes enterprise registration, digital asset issuance, cryptocurrency trading, user asset protection, regulation of crypto derivatives, KYC due diligence, upstream and downstream crypto industry norms, as well as ICO issuance portals, investor guidance, and crypto enterprise registration guidelines. This indicates Thailand’s approach to cryptocurrency is not merely regulatory but involves deep participation and embrace, rapidly guiding the development of the domestic crypto market.

6.2 Prohibition of Businesses Accepting Cryptocurrency

Since April 2022, the Securities and Exchange Commission of Thailand has prohibited businesses from accepting cryptocurrencies to maintain economic stability. Despite abolishing the 7% tax on digital asset investments, the country explicitly banned crypto companies from offering staking and lending services in September 2022.

This stands in stark contrast to Thailand’s supportive policies for blockchain technology and poses a challenge to its goal of becoming a major hub for blockchain innovation. Concerns about the risks associated with the widespread use of digital assets for goods and services transactions were raised in a joint statement by the Thai Securities and Exchange Commission and the Bank of Thailand.

Additionally, Thai banks are prohibited from directly participating in cryptocurrency transactions. A unique verification process is employed for first-time crypto investors, requiring the use of ‘dip-chip’ machines to scan national identification documents for on-site verification. For transactions exceeding 100,000 Thai Baht, exchanges must retain transaction data for at least ten years to prevent money laundering.

6.3 Taxation on Crypto Operations

In Thailand, individuals engaging in any cryptocurrency transactions, or earning profits through mining, staking, or other crypto activities, are subject to withholding tax and personal income tax:

• Withholding Tax: Profits earned from crypto activities (such as investment, mining, etc.) are subject to a 15% withholding tax.
• Personal Income Tax: This is a progressive tax with rates ranging from 5% to 37%. All Thai residents, or those residing in Thailand for more than 180 days, must pay personal income tax on income earned from cryptocurrencies.
• Value-Added Tax: Individuals with a turnover exceeding 1.2 million Thai Baht must pay a 7% value-added tax. In some cases, VAT can be refunded. Investors in Thailand are generally required to pay withholding tax, value-added tax, and personal income tax as stipulated. However, new types of taxes may arise due to residency status or other special requirements. Investors should reconfirm during the annual tax filing process to avoid omissions.

For businesses operating in the crypto space in Thailand, the taxes include corporate income tax, value-added tax, withholding tax, and specific business tax:

• Corporate Income Tax is also tiered. Net profits less than 1 million Thai Baht are taxed at 20%, and profits between 1 million to 3 million Thai Baht are taxed at 25%. However, businesses in Thailand often enjoy various tax exemptions based on different circumstances.
• Businesses with a turnover exceeding 1.2 million Thai Baht are required to pay a 7% value-added tax, which may be refundable in some cases.
• Withholding tax is waived for businesses legally operating in the crypto sector in Thailand. However, foreign companies or their legal representatives must pay a standard 15% withholding tax.
• Specific Business Tax has no detailed regulations yet, but it will be a variant of value-added tax. Crypto businesses only need to pay this specific business tax.

7. Summary

Thailand, located in Southeast Asia, heavily relies on exports for its economy. It ranks 9th in GDP among Asian economies. Driven by its three main sectors — agriculture, manufacturing, and services, Thailand has transitioned from an underdeveloped country to a ‘middle-income’ nation. Its legal tender is one of the strongest currencies in Southeast Asia.

The country is at the forefront globally in cryptocurrency adoption, on par with other leading nations. Currently, 13.02 million people in Thailand (9.3% of the total population) own cryptocurrencies. The crypto ecosystem in Thailand is quite developed, with traditional banks entering this emerging industry by establishing venture capital funds and investing in crypto-native and AI startups, further spurring growth in cryptocurrency adoption and market development in Thailand.

The government holds a relatively positive stance towards cryptocurrencies, recognizing them as ‘digital assets’ regulated by the Securities and Exchange Commission of Thailand and requiring operators to obtain licenses. Thai citizens can buy and sell cryptocurrencies, but businesses are prohibited from accepting them as a payment method.

Especially in terms of regulation, Thailand is ahead globally. For crypto investors, whether participating in crypto trading in Thailand or engaging in DeFi and other derivative services, there is no need to worry about the safety of assets stored on regulated centralized platforms. This also minimizes consumers’ exposure to crypto scams. As the industry continues to evolve, Thailand’s crypto ecosystem is likely to experience a siphon effect, attracting more projects and capital. This influx will foster innovative technologies and products that propel industry development.

Note: All of the above opinions are not investment advice. If there are any inappropriate points, please feel free to leave a message to supplement or correct them.

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