HashKey Asserts Thailand Crypto Appeal, But a Closer Look Raises Questions

[TL; DR]

Thailand is among the top ten Southeast Asian countries in terms of crypto adoption.

Binance, Bitkub, Gate.io, Bitazza and Huobi are some of the major crypto exchanges operating in Thailand.

Thailand’s ban of crypto payments retards its cryptocurrency adoption rate.

Introduction

During the past few years the popularity of cryptocurrencies around the world has increased as many people use them now. However, different governments are struggling to come up with relevant crypto regulations that will promote their greater use, yet protect national interests.

Most countries are worried that people may use cryptocurrencies for illegal purposes like tax evasion, money laundering and financing terrorism.

Thailand is one country that has tried to balance cryptocurrency adoption and protection of national interests. In this post, we cover the progress that the country has made in adopting cryptocurrencies. We will also cover some of the challenges that it faces.

Crypto Trading Boom in Thailand

A report by HashKey Group, a crypto fund in Asia, indicates that Thailand has progressed significantly in cryptocurrency adoption during the past few years. First, the report covers the increase in crypto trading volumes in the country. The report shows that the country recorded a trading volume of $116 billion between January and October 2023.

Similarly, the report shows that Thailand’s traffic to CoinMarketCap was 648,000, indicating the participation of about 0.98% of its population. In this regard, the country’s per capita visit to CoinMarketCap is about 0.21% higher than that of the United States.

According to the HashKey group report, there are several factors that have led to high crypto adoption in Thailand. For example, there is a supportive of digital services and favourable cryptocurrency regulations.

Citing Chainalysis, HashKey says that Thailand is ranked number 10 on the global scale in terms of crypto adoption index since it has high crypto ownership, peer-to-peer trading and decentralized finance (DeFi) protocols. We will now look at the key contributing factors to the country’s progress in the crypto sector.

Crypto Exchanges and Banks

There are several large crypto exchanges in Thailand that offer various digital assets the citizens can invest in. As an example, Orbix, Bitkub and Bitazza are the leading crypto exchanges in the country which support much of the trading activity.

Collectively, these exchanges have over 2.94 million individual accounts which constitute about 4.27% of the population. This figure surpasses the number of account holders for traditional stock exchanges.

Nevertheless, this does not mean that all Thai crypto users invest with only three exchanges. They are free to invest in other leading cryptocurrency exchanges like Binance and Gate.io. For example, between January and November 2023, Binance received an average of 116,877 visitors from Thailand.

The Thai crypto community also uses various crypto wallets to process their investments. MetaMask is one of the crypto wallets that is widely used in the country. As a result, Thailand experienced 797,931 MetaMask wallet downloads between September 2020 and August 2023.

In addition to using centralized exchanges like Binance and Gate.io, Thai users also access decentralized exchanges such as Pancakeswap.

Also, the Thai banking sector supports crypto activities in the country. For instance, SCB and Kasikornbank, two prominent banks in Thailand, have created ICO portals to offer the initial coin offering service to digital asset start-ups.

Apart from the supportive traditional banking sector and vibrant crypto exchanges there are other emerging services that help to prop up the cryptocurrency sector in the country. For instance, several crypto advisory service companies like Cryptomind, a notable start-up, provide their expertise to crypto firms and investors.

Crypto-Friendly Regulations

The Thai government has created crypto regulations that are favourable to crypto trading and related investments. The Emergency Decree on Digital Asset Businesses, B.E. 2561 provides the required guidelines for the crypto sector. For example, it stipulates the manner in which crypto firms should report digital asset investments and activities.

This piece of regulation creates clarity in several key crypto aspects. For example, this crypto law classifies digital assets as “cryptocurrencies, digital tokens, and other digital assets”. Accordingly, cryptocurrencies are defined as digital assets that are used as means of payment.

On the other hand, digital tokens are virtual assets that are used to confer voting rights on their holders or as investment vehicles, among others.

Also, the Thai Security and Exchanges Commission (SEC) oversees all cryptocurrency activities in the country. It monitors ICO issuers, brokerage firms, crypto advisors and fund managers, among others. Its role is to ensure crypto firms and users adhere to regulatory compliance.

Apart from overseeing crypto activities in the country, the Thai Security and Exchanges Commission (SEC) is responsible for creating and reviewing regulations that deal with most crypto assets.

Specifically, it sets guidelines for taxes, fees and initial coin offering, among others. The SEC does most of these things to promote transparency and innovation in the crypto sector. Due to its diligence, Thailand witnessed an increase in domestic and foreign investment in the country.

The Thai government has taken various steps to educate its citizens about blockchain technology and cryptocurrency. Its aim is to help individuals to invest wisely and avoid loss of their digital assets and funds.

Thailand New Tax Proposal Targets Overseas Income

Considering the growth in Thailand’s crypto adoption and trading volumes things may look very smooth. However, several things have raised concern on some developments in its crypto sector. The country’s ban on crypto payments and its new tax proposal have red flagged the country’s crypto sector.

The new Thai government has proposed a new crypto tax, targeting income earned abroad. With this new tax proposal, stock and crypto traders will be required to pay tax for cross-border trading. This development is, however, likely to discourage Thais from trading on foreign exchanges.

At the moment, Thailand levies 7% tax on cryptocurrency transactions, although changes may come in the near future. This is because the country wants to reclassify some cryptocurrencies. Currently, all cryptocurrencies are classified as commodities.

Posting on its blog, HashKey said, “Crypto is currently classified as a commodity, subject to a 7% transaction tax. Efforts are underway to reclassify crypto as an investment product like stocks.”

The new tax proposals target individuals who work in other countries and stay there for at least 180 days per year. In the past Thailand maintained a high tax on cryptocurrencies which it later revised down. As an example, in January 2022 the government introduced a 15% tax. Nonetheless, it reduced the tax rate to 7% in March of the same year.

Basically, the government aims to generate as much revenue as possible from taxation. It wants to ensure that everyone pays a fair share of his/her earnings as tax. This means that crypto traders will be severely affected by this development.

The other sad thing is that Thailand’s central bank maintains an anti-crypto stance. On many occasions it has threatened the crypto retail sector, creating much anxiety for many digital asset investors.

Crypto Payments Ban Remain Effective

Crypto in Thailand remains under threat as long as the government maintains its ban on cryptocurrencies. Although there seems to be a crypto trading boom in the country, only a small fraction of the population uses cryptocurrency.

Much crypto activity occurs in Bangkok, Thailand’s capital city, leaving most people in the rest of the country ignorant of them. The major contributing factor for this sad scenario is the government ban on crypto payments.

The government banned crypto payments in March 2022. A reason for that could be the country’s failure to create crypto law that closes the existing loopholes in the sector. Also, high crypto volatility makes it difficult for the country to tax them in a more meaningful and predictable manner.

The regulatory authority, the SEC, also raised the problem of money laundering. Like the situation in many other countries, Thai authorities believe that cryptocurrency promotes money laundering practices and similar crimes. In all, banning crypto payments has retarded its adoption in the country.

Thailand’s Prominent Role Asia’s Crypto Scene

Despite Thailand’s ban on cryptocurrency the government favours cryptocurrencies as they have the potential to contribute much to the country’s economy. Already, The Bank of Thailand and the consortium of Thai commercial banks are exploring ways to develop the country’s central bank digital currency (CBDC).

In terms of crypto in Asia, Thailand is among the top best crypto trading hubs among the countries constituting the Association of Southeast Asian Nations. As said earlier, Thailand hosts several leading crypto exchanges like Binance, Bitkub and Gate.io, Bitazza and Huobi.

Conclusion

Thailand is one of the countries in Southeast Asia that has progressed significantly in terms of cryptocurrency adoption. Several established cryptocurrency exchanges like Binance, Bitkub, Gate.io, Bitazza and Huobi operate in the country. However, Thailand’s ban on crypto payments and its proposed crypto tax policy are likely to affect its standing in the sector.

FAQs about Crypto in Thailand

Is crypto legal in Thailand?

Cryptocurrency is legal in Thailand as the citizens can buy, hold and sell it as they wish. There are clear regulations to govern various crypto activities like trading. However, Thailand does not allow its residents to use cryptocurrency to buy goods and services in the country.

Is crypto taxed in Thailand?

Thailand levies 7% on cryptocurrency transactions. However, it is proposing a tax for income which crypto investors earn for trading cryptocurrencies abroad.

Is Gate allowed in Thailand?

Gate.io is one of the leading cryptocurrency exchanges that are allowed in Thailand. Binance, Bitkub, Bitazza and Huobi are the other cryptocurrency exchanges that operate in the country.

How many people use cryptocurrency in Thailand?

More than 6.2 million people, about 9.3% of the Thai population, use cryptocurrency. Crypto-friendly regulations and government support for digital assets have resulted in a high rate of cryptocurrency adoption in the country.