Thailand takes the middle path on crypto

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Somewhere between the Salvadoran and Chinese approaches to crypto lies a middle way, neither a full-throat hug nor a strict ban. Call it crypto agnostic. Thailand appears to be taking this route, allowing the digital asset industry to grow organically, while gradually implementing the necessary regulations. For Thai regulators, the priority is not to develop a regional hub for decentralized virtual currencies – it is more of a Singapore project and something that Japan has considered – but simply to ensure that they are used in a way that benefits the country’s economy and society in general.

Thai regulators are paying more attention to digital assets due to their rapid growth in the kingdom. According to Nikkei Asia, in 2021, the number of people owning crypto in Thailand jumped over 400% year-on-year to 3.6 million. Trading accounts jumped to 2 million at the end of 2021 from just 170,000 at the start of the year, according to the Bangkok Post. According to data cited by Channel News Asia, up to THB 251 billion ($7.62 billion) of digital assets were traded in Thailand in November alone.

In November, Siam Commercial Bank acquired a 51% stake in digital asset exchange Bitkub – the leading crypto exchange in Thailand with a 92% market share – for 17.85 billion THB (approximately 536 million). dollars) through its subsidiary SCB Securities. Bitkub says it recorded a profit of THB 5 billion ($152 million) in 2021.

In mid-January, the world’s leading crypto exchange Binance announced that it would set up a crypto exchange with Gulf Energy Development in Thailand. In a statement to the exchange, Gulf Energy said its deal with Binance was a response to the rapid growth of digital asset infrastructure in Thailand.

Amid this flurry of digital asset activity, the Bank of Thailand (BOT), the Securities and Exchange Commission (SEC) and the Ministry of Finance (MOF) said in a January 25 press release that they would regulate digital assets as a means of payment. for goods and services. Regulators are concerned that the widespread and unregulated use of digital assets for settlements could lead to financial system instability, particularly price volatility, cyber theft, personal data leakage and money laundering. From a regulatory perspective, the territory of payments is more sensitive than investing, where the risks are mostly limited to those investing in digital assets, rather than the wider financial system.

The actual regulatory framework has yet to be decided, although regulators say there will be a consultation period during which feedback from stakeholders and the general public will be gathered. “However, technologies and digital assets that do not pose such risks should be supported by appropriate regulatory frameworks to drive innovation and further benefit the public,” the press release said.

At the same time, Thailand is also reportedly planning to implement a 15% capital gains tax on profits from cryptocurrency trading. According to The Bangkok Post, which quoted a source from the Thai Ministry of Finance, “in 2022, all taxpayers who earned cryptocurrencies, including investors and miners, are subject to a withholding tax of 15 %, while digital asset exchanges are exempt from these duties”.

However, Thailand’s revenue department also plans to allow traders to offset annual losses against gains for taxes due on cryptocurrency investments and to exempt certain transactions from 7% value-added tax, Ekniti Nitithanprapas, chief executive of the revenue department, said in late January. The rules will apply to transactions made through commercial operators or SEC-regulated exchanges, he told the Bangkok Post.

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