Crypto Dreams Dashed in Thailand as Regulators Tighten Rules

Thailand’s goal of becoming Southeast Asia’s leading trading center for digital assets has suffered a setback, following moves by regulators to tighten rules in the wake of trading irregularities and the collapse of a major acquisition involving a crypto exchange.

The country was the first in the region to implement digital-asset legislation in 2018, which helped attract droves of so-called millennials to put their money into cryptocurrencies. The Securities and Exchange Commission licensed six platforms as exchanges, including Bitkub Capital Group Holdings Co. and Zipmex Thailand. Bitkub founder and CEO Jirayut Srupsrisopa even became a pop-culture icon as a frequent guest on TV shows and YouTube, with his face plastered on highway billboards

The SEC’s 8.5 million baht ($233,459) fine against a Bitkub executive last month for insider trading and a police complaint earlier this week against Zipmex and its chief executive officer sent shudders through a market already unnerved by the global crypto rout. The SEC also plans a working group to enhance supervision of digital assets to enhance investor protection. 

The stricter oversight, experts said, has compounded the blows from beyond Thailand: the plunge in Bitcoin, Ether and other tokens, as well as meltdowns of crypto lender Celsius Network Ltd., broker Voyager Digital Ltd. and hedge fund Three Arrows Capital.

“Most investors and market players are extremely deflated with negative headlines almost every day,” said Nares Laopannarai, secretary-general of the Thai Digital Asset Association. “Rising regulatory risks will make it harder to restore the excitement in the market, which has already been hit by weakening global sentiment.”

The number of active trading accounts in Thailand fell to 246,000 in August, about a third the tally in January. 

SCB X Pcl, a financial group in which Thailand’s royal family is a major shareholder, last month scrapped its 18 billion baht to buy a majority of Bitkub Online, citing the exchange operator’s ongoing issues with regulators. 

“The collapse of digital-asset prices has wiped out a vast amount of wealth among Thai investors,” said Karin Boonlertvanich, executive vice president at Kasikornbank Pcl. “The realization of bubble-price risk will scare those people for quite some time to come.”

Trading of cryptocurrencies on Thailand’s licensed exchanges slumped to 64 billion baht in August, the least since December 2020, according SEC

Some Thai companies have also been scarred by their foray into crypto. Shares of Jasmine Technology Solution Pcl have plunged more than 80% from their peak in April on its increased investment in Bitcoin mining. Its stock is now one of the worst-performing among global telecommunications equipment companies this year after being a world leader in 2021. 

To be sure, some are still betting on growth in the crypto market. Gulf Energy Development Pcl, Thailand’s biggest private power producer, has doubled down on its plans for expanding into digital-asset businesses to diversify earnings. The company, controlled by Thailand’s second-richest person, Sarath Ratanavadi, is seeking licenses from the SEC to operate a digital-asset exchange and brokerage in partnership with BINANCE Holdings Ltd.

“We are confident about the potential for cryptocurrencies and digital assets as the world moves further and further into blockchain technology and related ecosystems,” Yupapin Wangviwat, Gulf Energy’s chief financial officer, said in an interview last month. “Tokens with underlying assets will compliment the transformations of most companies.”