MIX Capital: Thailand Cryptocurrency Market Research Report

Author: MIX Capital

Introduction

Thailand is a multi-ethnic country and, as an outward-oriented economy, has a significant wealth gap. Persistent low inflation is leading to a decline in the value of the Thai currency and ongoing economic contraction. Since 2017, the adoption rate of cryptocurrency in Thailand has been high, and the government has been continuously promoting the implementation of relevant regulatory policies, hoping to alleviate some economic development issues through the strengthening of open policies in the crypto market. This has provided a favorable market and policy environment for the rooting and development of the crypto industry locally.

1. Macroeconomic Indicators and Current Situation

Thailand is a middle power in global affairs and a founding member of ASEAN, ranking high on the Human Development Index. In terms of purchasing power parity, it is the second-largest economy in Southeast Asia and the 23rd largest economy in the world.

In 2014, Credit Suisse reported that Thailand was the third most unequal country in the world, following Russia and India. The top 10% of the wealthy hold 79% of the nation's assets, and the total net worth of the 50 richest families accounts for 30% of GDP. In 2016, Thailand ranked 87th on the Human Development Index and 70th on the inequality-adjusted Human Development Index.

1.1 Geographic Location and Population Size

The Kingdom of Thailand, abbreviated as Thailand, has its capital in Bangkok and is located in the southern part of the Indochinese Peninsula, bordered by the Pacific Gulf of Thailand to the southeast and the Andaman Sea of the Indian Ocean to the southwest. It shares borders with Myanmar to the west and northwest, Laos to the northeast, Cambodia to the east, and Malaysia to the south. The country has a tropical monsoon climate, with higher terrain in the north and lower in the south. It covers a total area of 513,000 square kilometers, has a coastline of 2,705 kilometers, and is divided into five regions with a total of 77 provinces.

According to the latest United Nations data compiled by Worldometer: as of January 2, 2024, Thailand's population is 71,844,093. The urban population accounts for 52.0% of the total population (37,322,064 in 2023). The population of Thailand represents 0.89% of the world's total population. There are over 30 ethnic groups, with the Thai being the majority, accounting for 40% of the total population, while the rest include Lao, Chinese, Malay, Khmer, and various hill tribes such as Hmong, Yao, Karen, Shan, and others. Over 90% of the population practices Buddhism, while the Malay community follows Islam, and there are also small numbers of Christians, Catholics, Hindus, and Sikhs.

1.2 Economic Structure and Scale

Thailand is an emerging economy considered an emerging industrialized nation and is the second-largest economy in Southeast Asia, after Indonesia. Its three main economic sectors are agriculture, manufacturing, and services. Thailand implements a free economic policy and is an outward-oriented economy, primarily relying on external markets such as China, the United States, and Japan. Agricultural products are one of Thailand's main sources of foreign exchange income.

In the 1980s, the manufacturing sector, including the electronics industry, developed rapidly, leading to sustained high economic growth, and in 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, electrical appliances, rice, textiles, footwear, fishery products, rubber, and jewelry.

1.3 GDP Ranking 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 global economy, with a growth rate of 2.6%, making it the ninth-largest economy in Asia.

The Thai economy is heavily reliant on exports, with exports accounting for more than two-thirds of GDP. The Bank of Thailand reported that from 2006 to 2016, only 6% of companies in the country were engaged in the export sector, while the export sector accounted for 60% of the national total revenue.

1.4 Per Capita GDP 4th in Southeast Asia

In 2022, Thailand's per capita GDP was $6,278.35. Thailand's per capita GDP is equivalent to 50% of the world average. From 1960 to 2022, Thailand's per capita GDP averaged $2,976.71, reaching a historical high of $6,453.89 in 2019.

Thailand ranks fourth in wealth distribution in Southeast Asia based on per capita GDP, following Singapore, Brunei, and Malaysia.

1.5 Inflation Rate Continues to Be Below Forecast Levels

In December 2023, Thailand's consumer prices fell by 0.83% year-on-year, marking the third instance of deflation following a 0.44% decline in November, with expectations of a 0.3% decrease. This also marks the most severe deflation in 34 months and the eighth consecutive month exceeding the central bank's target of 1% to 3%. The main contributor was government measures that led to a decrease in energy prices, specifically electricity and gasoline prices.

The core inflation rate in December was 0.58%, unchanged from November, the lowest level since January 2022, while expectations were for an increase of 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 fell by 0.46%.

According to Trading Economics' global macro model and analysts' expectations, Thailand's inflation rate is expected to be -0.10% quarter-on-quarter by the end of this quarter, with long-term projections of around 0.40% in 2024 and about 0.30% in 2025. This means that if the government does not take strong measures to change the situation, the decline in the value of the Thai currency, ongoing economic contraction, and the resulting widening wealth gap will continue into 2024.

1.6 Thailand's Legal Currency

Thailand's currency is the Thai Baht, code THB, which is the 10th most frequently used currency in the world and one of the strongest currencies in Southeast Asia. The Baht is becoming increasingly popular among "forex" traders. Thailand's economic fundamentals, including a healthy tourism sector and strong exports, support the consistent performance of the Baht.

The developing economy and the growing middle class make Thailand an attractive place for business. The Bank of Thailand is responsible for managing the Baht, and its strong policies help maintain exchange rate stability.

2. Users and Market in Thailand

2.1 Adoption Index Ranks 10th

Thailand performs well in civilian adoption, ranking 10th in Chainanalysis's "2023 Global Cryptocurrency Adoption Index." According to the "2022 Global Digital Overview Report," Thailand is one of the countries with the highest proportion of cryptocurrency ownership among internet users globally.

2.2 Growing Proportion of Crypto Users

Data from Statista.com on January 11, 2024: As of 2023, Thailand has 13.02 million cryptocurrency users, which is about 18.1% of the total population holding cryptocurrency. It is expected that after ten consecutive years of growth, this figure will reach 17.67 million users and peak at 17.67 million by 2028. Notably, the number of users in the fintech market's "cryptocurrency" sector has been steadily increasing over the past few years.

2.3 Young Males as Core User Group

User data for Thailand's crypto market is limited. According to a 2022 report by Datareportal in collaboration with Hootsuite and WeAreSocial, Thailand has a leading proportion of internet users who own cryptocurrency, participate in online shopping, and purchase groceries online. Among internet users aged 16 to 64 in Thailand, a significant portion owns cryptocurrency (20.1%), the highest proportion globally.

• Cryptocurrency investors are predominantly male, accounting for 52.9% of the total number of investors, and cryptocurrency has become an urgent investment form for Thais;
• About 75% of cryptocurrency investors are aged between 18 and 24, with only 1.1% of investors aged 55 and above;

3. CEX Preferences of Thai Users

According to the regulations of the Thai Securities and Exchange Commission, there is a list of registered and licensed CEX that are allowed to operate in Thailand:

3.1 Bitkub Recognized by SEC as CEX

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

3.2 Zipmex Second Largest CEX in Thailand

Founded in 2018 and headquartered in Singapore, Zipmex is a cryptocurrency exchange serving retail and institutional investors. It utilizes blockchain technology to provide secure investment, savings, and consumption opportunities in Southeast Asia. According to data from Coingecko.com, as of 2022, Zipmex holds a market share of 14.78% in Thailand based on trading volume.

3.3 ORBIX Most User-Friendly CEX

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

3.4 Bitazza Broker-Participated CEX

According to data from Coingecko.com, Bitazza is the third-largest cryptocurrency exchange ranked by trading volume, with a market share of 8.52%. Bitazza is a local digital asset platform in ASEAN, composed of relevant exchanges and brokers established across Asia, holding local operating licenses. Clients can directly access their trading accounts' respective personal brokers (not just via email and bots).

Bitazza provides easy access to local digital asset financial and custody services, as well as seamless and quick deposits, withdrawals, and conversions between local fiat currency and crypto assets.

3.5 Binance Localized Operation via Gulf Binance

Binance, the world's largest cryptocurrency exchange by trading volume, has 172 million users. Gulf Binance is a joint venture between Binance and Gulf, which has obtained a digital asset operator license issued by the Thai Ministry of Finance. Its digital asset platform is regulated by the country's Securities and Exchange Commission and began operations in Thailand in the fourth quarter of 2023. Gulf Binance will advance plans to establish a digital asset exchange and digital asset brokerage that comply with local regulatory guidelines.

3.6 Upbit Korean CEX with Operating License

Upbit is another centralized cryptocurrency exchange permitted to operate in Thailand. Upbit is a South Korean cryptocurrency exchange established in 2017 and operated by Dunamu, one of South Korea's highest-valued startups. Upbit has also obtained licenses in South Korea (holding a 48% market share), Singapore, and Indonesia, aiming to become one of the top centralized exchanges in Southeast Asia.

4. Web3 Projects in Thailand

4.1 Token Unlocks Token Data Analysis Platform

Token Unlocks has developed a token analysis platform that integrates on-chain and off-chain data to provide the best user experience. Their services include structured and tagged on-chain and off-chain token data, as well as customized on-chain monitoring for tracking token projects. This enables traders to make informed investment decisions by obtaining accurate token information and staying updated on project dynamics.

4.2 GuildFi Gaming Guild Empowering Players

GuildFi is a gaming platform that empowers all gaming communities and creates interoperability between metaverses, with investors including Coinbase Ventures, 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 has its own Treasury Zone, divided into different areas such as growth funds, development funds, and venture funds, and also has a Tool Zone for users to analyze relevant gaming data. Although there is still a gap compared to the total number of YGG guilds, it does not lag behind in terms of functionality and popularity, and its potential should not be underestimated.

4.3 Together.ai Decentralized Cloud Service Platform

Together.ai operates a technology service platform focused on providing decentralized cloud services for artificial intelligence. Their platform is specifically built for large, user-friendly, and open-source models. This helps researchers, developers, and companies leverage and enhance AI through an intuitive platform that encompasses data, models, and computing.

4.4 Token X Financing and Asset Tokenization Service Provider

Token X Co., Ltd. is a subsidiary of SCB X, providing ICO portal services and digital asset tokenization services. The company's goal is to become a successful partner in tokenization, with services covering tokenization consulting, blockchain technology development, and blockchain networks. Their client base primarily consists of companies seeking more flexible financing solutions. ICOs provide token issuers with more options regarding supported assets, which can include traditional real estate as well as rights and services.

4.5 3Landers Adventure Collaboration Collectible NFT

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 unique feature combinations and underlying "DNA."

Holding a 3Landers NFT makes you a member of the 3Lander world and community, dedicated to building meaningful long-term connections through collaboration, adventure, construction, creation, and dreams.

4.6 Bitkub Chain Ethereum Fork Public Chain

Bitkub Chain, developed by Bitkub Blockchain Technology Co., Ltd., is a blockchain platform forked from Ethereum, possessing technology standards comparable to Ethereum. Its native token, Bitkub Coin (KUB), has been listed on multiple exchanges.

The platform supports tokens based on the KAP-20 standard, such as KKUB, KUSDT, KBTC, LUMI, DK, etc. Bitkub Chain utilizes Ethereum-compatible datasets, making the development of decentralized applications (DApps) easier. The platform features fast block validation and placement capabilities, taking only a few seconds, and maintains low transaction fees through the Proof of Staked Authority (PoSA) consensus algorithm.

5. Cryptocurrency Venture Capital in Thailand

Thailand's venture capital primarily consists of traditional large enterprises, including the two major banks, Siam Commercial Bank (SCB) and Kasikorn Bank (KBANK). SCB 10x is the venture capital arm of SCB, while KX is the venture capital initiated by KBTG, a subsidiary of Kasikorn Bank (KBANK).

5.1 SCB 10X

In Thailand, traditional banks can participate in the cryptocurrency sector by establishing subsidiaries. SCB X (Siam Commercial Bank) operates within this framework through SCB 10X, which is one of Thailand's most successful crypto venture capital firms.

Established in 2020 and headquartered in Bangkok, SCB 10X tends to invest in projects related to big data analytics, machine learning, blockchain, fintech, decentralized finance, and digital work and lifestyle, covering countries such as the United States, China, Israel, and Southeast Asia. SCB X has also launched TokenX as a web3 project incubator, with a portfolio that includes Together.ai, Vis.ai.ai, Ai21.com, and others.

5.2 KBTG

Kasikorn Business Technology Group (KBTG) has launched a $100 million fund, KXV, specifically investing in startups related to web3 and artificial intelligence. KBTG Group Chairman Krating Poonpol and KXV's Executive Director Jom Vimolnoht jointly oversee the fund.

The fund's main focus is to identify and support AI, web3, and deep tech fintech startups globally, potentially with a focus on the Asia-Pacific region. In the web3 sector, KXVC will actively consider various tech startups, including innovative technologies such as zero-knowledge proofs and liquidity collateral derivatives.

KBTG is the technology department of Kasikorn Bank (KBank), which ranks second in Thailand in terms of asset size.

6. Cryptocurrency Regulatory Framework in Thailand

Before 2018, Thailand adhered to a regulatory approach of "strictly prohibiting cryptocurrency trading." After noticing the surge of ICOs from domestic crypto projects in 2017, the Thai Securities and Exchange Commission decided to launch guidelines for cryptocurrency and initial coin offerings (ICOs) after several months of public consultation, preparing to accept cryptocurrency trading.

6.1 Evolution of Regulatory Regulations for the Crypto Industry

• In May 2018, the "Emergency Decree on Digital Asset Business" officially came into effect, designating the Thai Securities and Exchange Commission (SEC) as the official regulator of all digital assets in Thailand, requiring all parties involved in digital asset trading to register with the SEC and obtain business licenses.
• In June 2018, Thailand announced digital asset regulatory guidelines, allowing investors to legally trade seven mainstream cryptocurrencies and permitting ICO issuers to apply for issuance and provide digital tokens.
• In July 2018, the Thai SEC issued standards to support digital asset business operations, stipulating that crypto businesses operating in Thailand must obtain a digital asset business license issued by the Ministry of Finance.
• In August 2020, the SEC required crypto trading accounts to strictly adhere to KYC standards, mandating crypto businesses to set KYC levels to facilitate different types of customers.
• In February 2021, the SEC required crypto businesses to comply with investor knowledge testing standards, conducting knowledge tests for crypto users before providing crypto services and refusing service to users who do not meet the testing requirements.
• In May 2021, the SEC stipulated that DeFi businesses involving digital token issuance must comply with regulations, requiring DeFi projects operating in Thailand that involve issuing digital tokens to serve users to obtain business licenses and comply with the "Digital Asset Act."
• In August 2021, the SEC mandated that crypto businesses must protect platform users' assets, requiring that customer funds on the platform must have multi-signature authorization for withdrawals or transfers, and user crypto assets stored on the platform must not be used for other purposes, prohibiting the deposit of user funds in commercial banks for interest.
• In February 2022, the SEC revised advertising regulations, restricting misleading promotional advertising for crypto, stipulating that crypto advertisements must not exaggerate claims and must be clear and appropriate, published only on the official channels of crypto businesses, and not in other public areas.
• In March 2022, the SEC issued the "Standards for Digital Asset Business Operators," requiring crypto businesses not to use cryptocurrencies to pay for goods or services and not to use cryptocurrencies as a means of payment to avoid affecting Thailand's financial security.
• In December 2022, the SEC released a draft of the "ICO Portal and Digital Token Issuance Regulatory Standards," improving the principles of ICO portal regulatory rules and related digital token issuance rules.
• In March 2023, the SEC released the "Overall Digital Asset Regulatory Policy," covering regulatory policies for the entire crypto industry chain, including the issuance of tokens in the primary market and the operational regulation of secondary market exchanges, etc.
• In November 2023, the SEC updated the standards for debt ICOs and supporting ICO infrastructure, adding debt ICOs and infrastructure ICO products, requiring that the credibility of these two types of crypto projects must be assessed and disclosed through ICO portals, along with due diligence and asset evaluation for ICO projects.

From 2018 to 2023, Thailand's cryptocurrency regulatory policies have undergone multiple improvements and updates, with the regulatory scope intricately covering every aspect of the crypto industry. Whether it is corporate registration, digital asset issuance, cryptocurrency trading, user asset protection, regulation of crypto derivatives, KYC due diligence in the upstream and downstream of the crypto industry, or ICO issuance portals, investor guidance, and registration guidelines for crypto businesses, all indicate that Thailand's approach to the crypto industry is not merely regulatory but involves deep participation and embrace, rapidly guiding the development of the domestic crypto market.

6.2 Strict Prohibition on Businesses Accepting Cryptocurrency

Since April 2022, the Thai Securities and Exchange Commission has begun prohibiting businesses from accepting cryptocurrency to maintain economic stability. Although the 7% tax on digital asset investments has been removed, the country explicitly prohibited crypto companies from providing staking and lending services in September 2022.

This stands in stark contrast to Thailand's supportive policies for blockchain and poses challenges to its goal of becoming a major hub for blockchain innovation. In a joint statement, the Thai Securities and Exchange Commission and the Bank of Thailand expressed concerns about the risks associated with the widespread use of digital assets for trading goods and services.

Additionally, Thai banks are prohibited from directly participating in cryptocurrency trading and employ a unique verification process for first-time crypto investors, requiring the use of "dip-chip" machines to scan national ID cards for on-site verification. For transactions exceeding 100,000 Baht, exchanges must retain data for at least ten years to prevent money laundering.

6.3 Taxation on Crypto Businesses

For individuals, trading any cryptocurrency in Thailand or earning profits through mining, staking, etc., requires paying withholding tax and personal income tax.

• Withholding tax refers to profits earned through crypto activities (such as investment, mining, etc.), where the profit portion must pay a 15% withholding tax;
• Personal income tax is progressive, generally ranging from 5% to 37%. All Thai residents or residents living in Thailand for more than 180 days must pay personal income tax on income earned through cryptocurrency;
• Individuals with a turnover exceeding 1.2 million Baht must pay 7% VAT, which can be refunded in some cases;

In general, investors in Thailand only need to pay withholding tax, VAT, and personal income tax as required, but new tax types may arise due to residency status or other special requirements. Investors should reconfirm during annual tax payments to avoid omissions.

• Establishing a crypto business in Thailand requires paying corporate income tax, VAT, withholding tax, and special business tax based on the situation.
• Thailand's corporate income tax is also tiered. For net profits < 1 million Baht, the tax is 20%; for net profits between 1 million and 3 million Baht, the tax is 25%; however, companies entering Thailand typically enjoy various tax exemption policies based on different circumstances;
• Businesses with a turnover exceeding 1.2 million Baht in Thailand must pay 7% VAT, but in some cases, they can apply for a refund, depending on the actual situation;
• For companies legally operating crypto businesses in Thailand, withholding tax can be exempted, but foreign companies or their legal entities must pay the normal 15% withholding tax;
• There are currently no specific regulations for special business tax, but it will be a variant of VAT, and crypto businesses only need to pay special business tax;

7. Conclusion

Thailand, located in Southeast Asia, has an economy that heavily relies on exports, ranking 9th in GDP among Asian economies. Driven by agriculture, manufacturing, and services, Thailand has transformed from an underdeveloped country to a "middle-income" country, and its legal currency is one of the strongest in Southeast Asia.

Thailand's cryptocurrency adoption rate ranks among the highest globally, on par with other countries. Currently, 13.02 million people (9.3% of the total population) own cryptocurrency. Thailand's crypto ecosystem is quite developed, with traditional banks entering this emerging industry by establishing venture capital funds and investing in crypto-native and AI startups, which will further drive growth in cryptocurrency adoption and market development in Thailand.

The Thai government holds a relatively positive attitude towards cryptocurrency, recognizing it as a "digital asset" regulated by the Thai Securities and Exchange Commission, requiring operators to obtain licenses. Thai citizens can buy and sell cryptocurrencies, but businesses are prohibited from accepting cryptocurrencies as a means of payment.

In particular, in terms of regulation, Thailand has taken the lead globally. For crypto investors, whether participating in cryptocurrency trading in Thailand or engaging in derivatives businesses like DeFi, users do not need to worry about the security of assets stored on regulated centralized platforms, which can minimize consumer exposure to crypto scams. With the continuous development of the industry, Thailand's crypto ecosystem is bound to create a siphoning effect, attracting more projects and funds, and giving rise to more innovative technologies and products that can drive industry development.