Thailand Web3 Market Development Report: A Comprehensive Analysis of Regulatory Policies and Market Opportunities

Author: AiYing Compliance

Globally, Web3 technology is rapidly evolving and attracting widespread attention. Governments, businesses, and developers in various countries are actively exploring and promoting the application of Web3. For instance, cryptocurrencies and decentralized finance (DeFi) have become significant innovations in the financial sector, while NFTs (non-fungible tokens) have shown tremendous potential in the arts and entertainment industries. Web3 not only brings technological innovations but also triggers profound impacts on economic and social levels, driving the development of the digital economy and the transformation of the global economic structure.

In Southeast Asia, Thailand stands out as a leader in the Web3 market. The country boasts a comprehensive regulatory framework for digital assets, active market participants, and robust technological and financial infrastructure. This positions Thailand at the forefront of adopting and innovating Web3 technology in the region. Particularly in areas such as blockchain applications, cryptocurrency trading, and decentralized finance, Thailand demonstrates significant potential and competitiveness.

Aiying aims to summarize the current status, challenges, and opportunities of Thailand's Web3 market through this Tiger Research report, revealing the core advantages and development prospects of Thailand in this emerging field. By studying Thailand's regulatory environment, market participation, and specific actions taken by businesses and developers, this report helps understand how Thailand is rising in the Web3 wave and explores its future development paths. It is hoped that the analysis and interpretation of this report can provide valuable references and insights for policymakers, business decision-makers, and industry participants.

1. Thailand's Web3 Market

Political Background

Despite a complex political environment, the Thai government has shown a positive attitude towards digital assets and blockchain technology. The government's pro-cryptocurrency policies and support for Web3 technology provide a favorable political environment for the development of Thailand's Web3 market. For example, the Securities and Exchange Commission (SEC) of Thailand and the Bank of Thailand (BOT) introduced a series of regulatory measures in 2018 and 2021, respectively, to regulate and promote the development of cryptocurrencies and related businesses. These measures provide legal guarantees and a clear regulatory framework for the application of Web3 technology in Thailand, helping to attract domestic and foreign businesses and investors.

Economic Background

Thailand is one of the important economies in Southeast Asia, known as the "Asian Tiger." According to 2023 data, Thailand's GDP reached $512.2 billion, making it the second-largest economy in Southeast Asia, after Indonesia. Thailand's per capita GDP ranks second among Southeast Asian countries, only behind Singapore. However, Thailand also faces some economic challenges, such as political turmoil, an aging population, and income inequality.

Despite this, Thailand shows tremendous potential in the digital economy. The Thai government actively promotes digital transformation, hoping to achieve economic growth through the development of Web3 technology and the digital asset market. Particularly during the pandemic, the demand for the digital economy and online services significantly increased, creating new opportunities for the application of Web3 technology.

2. Regulatory Framework

1. Thailand's Digital Asset Regulatory System

Thailand's digital asset regulatory system is one of the most comprehensive and systematic in Southeast Asia. The establishment of its regulatory framework began in 2018 when the Thai government enacted the Emergency Decree on Digital Asset Businesses. This decree marked an important step for Thailand in the field of digital assets and blockchain technology, making it the first country in Asia to systematically regulate ICOs and other digital asset businesses.

2. Implementation of the 2018 Emergency Decree

In May 2018, the Thai government issued the Emergency Decree on Digital Asset Businesses (B.E. 2561). This decree primarily covers the following aspects:

• Definition and Classification of Digital Assets: Digital assets are divided into two categories: cryptocurrencies and digital tokens. Cryptocurrencies, such as Bitcoin and Ethereum, are defined as "electronic units of information issued based on distributed ledger technology (DLT)." Digital tokens are defined as "virtual assets representing rights in specific blockchain projects."
• Regulatory Authority: The Securities and Exchange Commission (SEC) of Thailand is empowered to regulate the digital asset market, responsible for approving and supervising digital asset exchanges, brokers, dealers, and other related businesses.
• Licensing System: The decree requires all businesses involved in digital assets to obtain a license from the Thai SEC, including digital asset exchanges, brokers, dealers, ICO issuers, and ICO platforms.

3. Licensing Application Requirements and Their Impact

Exchange License:

• Application Conditions: Digital asset exchanges must be registered in Thailand, with a minimum capital requirement of 50 million baht (approximately $1.35 million). Additionally, exchanges must ensure the security of customer assets, with over 90% of assets stored in cold wallets.
• Operational Standards: Exchanges must comply with anti-money laundering (AML) and know your customer (KYC) regulations to ensure transaction transparency and compliance.
• Impact: This regulatory measure has increased market transparency and security, attracting more investors and institutions to participate, laying a foundation for the healthy development of Thailand's digital asset market.

Digital Asset Brokers and Dealers:

• Brokers: Must be registered in Thailand, with a minimum capital requirement of 25 million baht (approximately $675,000), and cannot incorporate customer orders into their own accounts.
• Dealers: Minimum capital requirement is 5 million baht (approximately $135,000), primarily targeting professional investors.
• Impact: By clarifying the responsibilities and requirements of brokers and dealers, the Thai SEC effectively regulates market behavior, preventing market manipulation and other improper actions.

4. ICO Regulatory Measures and Their Impact

ICO Issuance:

• Approval Process: ICO issuance must undergo preliminary review by the ICO platform and submit a registration statement to the Thai SEC, including a business plan, white paper, use of funds, and financial statements. The SEC has 60 days to review and decide whether to approve.
• Issuance Platform: Issuance can only occur through SEC-approved ICO platforms, ensuring project legitimacy and investor protection.
• Investor Protection: Retail investors are limited to an investment cap of no more than 300,000 baht (approximately $8,100) per ICO project, with a restriction that 30% of the total ICO amount is allocated for general subscription.

ICO Platforms

• Application Conditions: ICO platforms must be registered in Thailand, with a minimum capital requirement of 5 million baht (approximately $135,000), and must have mechanisms to prevent conflicts of interest.
• Responsibilities: Conduct project due diligence, technical audits, anti-money laundering duties, investor suitability assessments, fund management, and information disclosure supervision, among others.
• Impact: The establishment of ICO platforms and strict approval processes have increased the transparency and legitimacy of ICO projects, enhancing investor confidence and promoting steady development in Thailand's ICO market.

3. Market Overview

1. CEX Market: Current Status and Trends of Retail Cryptocurrency Trading in Thailand

Thailand exhibits a high level of activity in retail cryptocurrency trading. According to 2023 data, the number of users on Thai cryptocurrency exchanges reached 2,949,445, while the number of stock market accounts during the same period was only 2,526,530. This phenomenon reflects the strong interest and active participation of the Thai public in cryptocurrencies.

• Dominance of Bitkub: Bitkub Exchange is the main player in the Thai market, accounting for about 95% of trading volume. As the first company to obtain a digital asset exchange license, Bitkub not only leads in trading volume but also has a broad presence in the Web3 space through its parent company, Bitkub Capital Group Holdings, which operates multiple subsidiaries.

• Government Support: The Thai government actively promotes cryptocurrency trading, exempting profits from cryptocurrency and digital token trading from a 7% value-added tax starting in 2024, further stimulating market vitality.
• Market Drivers: The high participation in Thailand's cryptocurrency trading market is primarily driven by high convenience, government incentive policies, and severe income inequality. Thailand's trading system allows all bank accounts to transfer to exchanges, making transactions very convenient. Additionally, income inequality prompts many Thais to view cryptocurrency investment as an opportunity to change their economic situation.

2. DeFi Market: Participation and Drivers of Thailand's DeFi Market

Thailand's DeFi market also shows significant activity, with participants accounting for about 20% of CEX participants. This ratio is rare in other countries, reflecting the high speculative tendency of Thai investors and their expectations for high returns.

• Main Drivers: According to research by Tiger Research and Kyros Ventures, the average expected return rate for Thai investors is as high as 10 times, indicating their willingness to take on higher risks in pursuit of high returns. This high speculative tendency is the main driver of the high participation in the DeFi market.
• Popular DeFi Projects: Arbitrum is currently the most popular DeFi project in Thailand, followed by Optimism and other projects. DeFi projects further attract investor participation through airdrops and liquidity mining activities.

3. ICO Market: Thailand's ICO Platforms and Their Operating Models

Thailand's ICO market is strictly regulated, with currently seven legally operating ICO platforms, mainly operated by subsidiaries of financial companies. These ICO platforms play a key role in the issuance, consulting, and technical support of ICO projects.

Main ICO Platforms

• Token X: A subsidiary of SCBX, providing comprehensive services from token issuance consulting to blockchain technology support. Successfully issued the "BNK48 Governance Token," a utility token used in the entertainment industry.
• Kubix: A subsidiary of Kasikorn Bank, managed the financing project for the movie "Destiny of Love," issuing the investment token "Destiny Token."

• XSpring Digital: A subsidiary of XSpring, issued the investment token "SiriHub Token," and obtained licenses as a digital asset broker and dealer, supporting digital asset trading.

ICO Project Cases:

• BNK48 Governance Token: Issued by the Thai entertainment company iAM, fans can participate in voting and enjoy various rights through the iAM48 application, enhancing interaction between fans and artists.
• Destiny Token: Issued by GDH 559 for fundraising for the movie "Destiny of Love," allowing investors to receive returns based on movie revenues and enjoy special event participation qualifications.

4. OTC Trading: Legality and Growth

Thailand's OTC trading market is legal and growing rapidly, primarily serving institutional investors. Bitazza is a major player in this field, holding a digital asset broker license and quickly launching services to capture the market.

• Market Characteristics: OTC trading is favored by institutional investors due to its ease of operation and compliance, especially suitable for handling large transactions. Retail investors can also participate, but due to high thresholds (Bitazza requires a minimum order amount of $30,000), retail participation is limited.
• Main Participants: Bitazza dominates the market, processing trade orders through global exchanges or dealers, offering more flexibility and trading varieties than digital asset exchanges.
• Market Potential: With increasing demand from businesses for OTC trading, Thailand's digital asset broker market shows tremendous growth potential. Accurate pricing and efficient trade execution are key factors for market success.

4. Segment Market Analysis

1. Gaming Market:

Thailand's Web3 gaming market shows tremendous growth potential, especially in the mobile gaming sector. The smartphone penetration rate in Thailand reached 71.47% in 2023 and is expected to rise to 97% by 2028, providing a solid user base for the development of Web3 games.

Main Games: Globally recognized Web3 games such as "Nightcrow," "Mir4," and "Axie Infinity" are very popular in Thailand. However, local game developers have relatively little experience in developing original games, resulting in lower game quality.

Model Shift: As the popularity of the Play-to-Earn (P2E) model declines, user behavior has changed. Players are more inclined to cash out their earnings immediately. To adapt to this change, hybrid model games, such as "Nightcrow," which combines Web2 and Web3 elements, are emerging as a new development trend.

2. NFT Market:

Thailand's NFT market has also experienced a decline in trading volume against the backdrop of a global market slump, but individual artists' works and a few blue-chip projects still maintain active communities.

Individual Artists: Young Thai artist Gongkan's art NFTs have gained widespread attention for their unique style and creativity, even receiving praise from Apple CEO Tim Cook, further enhancing the popularity of his works.

Blue-Chip Projects: Projects like Pudgy Penguins and Azuki have established strong local communities in Thailand. Despite the overall market heat declining, these projects maintain high participation through regular events.

Government Participation: The Tourism Authority of Thailand (TAT) launched the "Amazing Thailand NFT" project, combining the T2E (Travel to Earn) model, allowing tourists to collect art NFTs by visiting specific attractions and using them for travel-related discounts. This innovative project showcases the integration of blockchain technology with the tourism industry.

3. Infrastructure:

Thailand's Web3 infrastructure is continuously evolving, with BNB Chain currently dominating the market, but emerging chains like Arbitrum, Optimism, and Ronin are also gradually gaining prominence. BNB Chain: Due to its EVM compatibility, strong developer community, and support from the Binance ecosystem, BNB Chain has extensive applications in Thailand.

Emerging Chains: Arbitrum performs strongly in the DeFi space, while Ronin and Optimism are rising in the GameFi sector. Thailand's Bitkub Chain is also supporting Web3 games and has launched games like "Dawn Village," showing a trend of diversified development.

Local Chains: Most local chains in Thailand are private chains used for regulated businesses, with Bitkub Chain being the only public chain, operating as an Ethereum hard fork mainnet and planning for global expansion in Southeast Asia.

4. Custody and Wallet Services:

Thailand's digital asset custody service market is gradually taking shape. Initially, due to market uncertainty and high capital requirements, no projects applied for custody service licenses.

• Main Participants: As the market recovers, companies like RakkaR Digital and Orbix Custodian have begun applying for custody service licenses. These companies provide secure digital asset custody services to clients while meeting strict regulatory requirements.
• Market Dynamics: Although global custody service providers like Fireblocks hold a certain market share in Thailand, competition is expected to intensify with the introduction of locally licensed custody services.
• Non-Custodial Wallets: MetaMask is the most widely used non-custodial wallet in Thailand, similar to other countries.

5. Developer Ecosystem:

Although Thailand's developer community is not as large as that of neighboring countries, it is rapidly growing with the support of companies and universities.

Support Projects: For instance, Bitkub Chain holds monthly "BKC Developer Promotion Meetings" to fund promising projects and supports developers through "BKC Developer Tools." This developer-friendly strategy demonstrates its commitment to advancing the regional blockchain ecosystem.

University Role: Major universities like Chulalongkorn University, Chiang Mai University, and Thammasat University actively participate in blockchain talent cultivation and operate their own blockchain clubs, showing strong interest in the Web3 industry.

Digital Nomads: Thailand attracts a large number of digital nomads due to its long-term visa offerings and lower cost of living, which directly and indirectly promotes the development of the IT industry.

6. Corporate Initiatives:

Thailand's Web3 industry is primarily driven by traditional financial and energy companies, which actively invest in Web3 projects with government support.

Major Enterprises:

• SCBX: Through its subsidiaries SCB 10X, Token X, and InnovestX, it invests extensively in the Web3 space, including ICO platforms, digital asset trading, and custody services.
• Kasikorn Bank: Actively participates in digital asset investment analysis, NFT markets, and digital asset trading through subsidiaries like KX (Kasikorn X), Kubix, and Orbix Trade.
• Gulf Energy Development: Operates the Gulf Binance digital asset exchange in partnership with Binance.
• PTT Group: Operates a blockchain-based renewable energy trading platform, ReAcc.
• Bitkub: Thailand's leading blockchain technology and digital asset company, extensively invests in the Web3 space through multiple subsidiaries, including Bitkub Chain and Bitkub Exchange.

Challenges and Opportunities

Challenges

1. Political Instability

• Background: Since becoming a constitutional monarchy in 1932, Thailand has experienced 19 military coups. The most recent coup occurred in 2014, and although a pro-cryptocurrency government came to power in 2023, the political environment in Thailand remains uncertain.
• Impact: Political turmoil may lead to policy discontinuity and changes in the regulatory environment, affecting market confidence and long-term planning for investors.

2. Aging Population

• Background: Thailand's aging population issue is becoming increasingly severe, with a median age of 40.5 years in 2023, significantly higher than neighboring Vietnam (32.8 years) and Laos (24.4 years).
• Impact: An aging society may lead to labor shortages, reduced innovation capacity, and slowed economic growth, thereby affecting the talent supply and technological innovation in the Web3 market.

3. Income Inequality

• Background: Thailand faces serious income inequality, with wealth distribution being extremely uneven. High income inequality may lead to social instability and insufficient purchasing power.
• Impact: Although income inequality drives some groups to actively engage in cryptocurrency investment, the overall lack of purchasing power may limit the further expansion and popularization of the market.

Opportunities

1. Young Leadership

• Background: Despite facing an aging population issue, the development of the Web3 market is primarily driven by young leaders in their 30s, such as those in Bitkub and Cryptomind.
• Impact: These young leaders have a high acceptance of new technologies, strong innovation capabilities, and can quickly adapt to market changes, driving the development and popularization of Web3 technology.

2. Government Support Policies

• Background: The Thai government actively promotes the development of the digital economy and Web3 technology. Pro-cryptocurrency policies, exemption of value-added tax on profits from digital asset trading, and support for blockchain technology are important measures for the government to drive market development.
• Impact: The government's supportive policies provide a favorable market environment, attracting a large number of domestic and foreign investors and businesses, helping to enhance market confidence and accelerate technological innovation.

3. Participation of Traditional Financial Institutions

• Background: Traditional financial institutions in Thailand, such as SCBX, Kasikorn Bank, and Gulf Energy Development, actively participate in and invest in Web3 projects, establishing digital asset subsidiaries and funds.
• Impact: The participation of traditional financial institutions not only brings rich resources and funding support but also accelerates the popularization of Web3 technology and applications through their extensive customer base and market influence.

Aiying Summary

In the rapid development of Thailand's Web3 market, despite facing challenges such as political instability, an aging population, and income inequality, it shows tremendous opportunities and development momentum due to young leadership, government support policies, and active participation from traditional financial institutions. Thailand has established a comprehensive and strict regulatory system for digital assets through the Emergency Decree on Digital Asset Businesses of 2018, with a clear regulatory framework that standardizes market behavior, enhances market transparency and security, and attracts significant investment and business participation. Various fields, including cryptocurrencies, ICOs, DeFi, retail cryptocurrency trading, NFT markets, and continuously evolving infrastructure and custody services, demonstrate significant potential and activity, positioning Thailand as a leader in the Web3 industry in Southeast Asia and even globally.

Additionally, according to Aiying, the Thai government announced on May 29 the launch of a new visa category for digital nomads and freelancers. The Thai government has introduced a new Thailand Destination Visa (DTV) for foreigners wishing to work while vacationing. The DTV costs $270 (10,000 baht) and is valid for five years. The DTV allows a stay of 180 days, which can be extended for another 180 days for the same fee, allowing holders to work in Thailand for nearly 12 months each time. The visa stipulates that those working remotely in Thailand must provide at least approximately $13,650 (500,000 baht) as support guarantees for spouses and children.