Thai Crypto Exchange Bitkub Turns To Gaming To Expand Its Market Presence

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Thailand’s largest digital asset exchange, Bitkub, on Tuesday announced a partnership with Bangkok-listed game publisher Asphere in a bid to turn the tide of the local industry after last year’s “crypto winter”.

Asphere, the publisher of hit games including Ragnarok Online, has purchased a 9.22% stake in the Bitkub Online exchange from Bitkub Capital Group for 600 million THB (17.5 million USD). Bitkub hopes to combine its blockchain infrastructure with Asphere’s content offerings and a user base of 180 million across six Southeast Asian countries.

“It’s good to prepare the infrastructure now before the country reaches an inflection point. When content meets infrastructure, one plus one equals 10,” Bitkub Group Founder and CEO Topp Jirayut Spupsrisopa told Nikkei Asia in an exclusive interview.

Bitkub Online ended 2022 with a profit of 341.87 million THB (9.8 million USD), down 86% from 2021 after its own regulatory hurdles and a failed acquisition by Siam Commercial Bank. Thai digital asset exchanges suffered a 79% decline in trading volume last year, but the liquidity crunch at No. 2 exchange Zipmex helped Bitkub boost its market share to 75.4%, with 2 million users, according to crypto data analyst CoinGecko.

Crypto’s poor year was an opportunity for Bitkub to assess the company’s layoffs and inefficiencies, Topp said. Bitkub Capital announced that it laid off 5.5% of its staff last week.

Investing in Bitkub is also a strategic move for Asphere, which changed its name from Asiasoft in March and plans to invest THB 1.2 billion ($34.7 million) to expand beyond game publishing into blockchain, media and marketing, and venture capital. South Korean gaming companies have made similar investments in crypto exchanges.

Asphere’s games are popular in all four Southeast Asian countries, Vietnam, the Philippines, Indonesia, and Thailand, which rank among the top 12 for crypto ownership globally. Asphere and Bitkub in September launched Kubplay Entertainment, a joint venture to develop blockchain-enabled gaming platforms.

The company’s first rollout this year will be TSX, a version of an online game set in ancient China, where players can buy and hold in-app assets, and receive rewards denominated in kubcoin, Bitkub’s native cryptocurrency.

The companies expect to see revenue from the joint venture in the fourth quarter, when formidable rival global crypto exchange Binance is expected to begin operating in Thailand.

“As long as there is good and fair competition, the market is big enough for everyone,” Topp said.

While crypto ownership among Thais is still below 10%, the Thai Securities and Exchange Commission has established regulations for digital asset licensing and tokens. The regulator issued new regulations on initial coin offerings this year, with input from the industry.

“We need to bridge the communication gap” between regulators and crypto operators, Topp said. “The key word is standardization of governance and regulations, and definitions across the world, especially on scalability and security,” he added.

Bitkub will take at least two more years before an IPO, preferably in Bangkok. “We want to give Thailand a chance,” Topp said.

But Hong Kong could also be an option if market conditions in the city, which has aggressively courted fintech firms, are more welcoming to crypto startups than Bangkok. Regulatory repression in the United States and Europe has caused fintech and crypto companies to seek refuge in Hong Kong and Dubai.

“Crypto will take off more in emerging Asia-Pacific markets, not in countries with higher sunk costs in legacy infrastructure,” Topp said.

The Bitkub founder added that 2024 could be a “golden year” for crypto, as central banks hit the cap on interest rate hikes and the supply of new bitcoin is halved again in April. Bitcoin price has stabilized at $30,000 over the past month, rising 80% this year and 33% since the summer 2022 crash.

“Next year could be the last time there will be volatility in the price,” Topp predicted, a hurdle bitcoin must clear to prove it is a digital form of gold.

“I don’t think the next down cycle will be bad because of institutional money coming in. For institutional money to come in, the market needs to be fully regulated and have the safety infrastructure in place,” he said.

Besides gaming, central bank digital currencies could bring crypto into the mainstream, or “on the ramp.” The Bank of Thailand launched a pilot program for a digital baht with selected banks late last year.

“Hopefully we’ll see the actual product soon,” Topp said. “Once people are on the ramp, they rarely come out.”

This article first appeared on Nikkei Asia. It has been republished here as part of 36Krs’ ongoing partnership with Nikkei.

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