Cryptocurrency gains momentum in Thailand, across globe     

A Bitcoin digital currency ATM shop in Marseille, southern France, on January 8, 2021. (Photo by NICOLAS TUCAT / AFP)

Proponents of cryptocurrency are celebrating after the Securities and Exchange Commission (SEC) reached a conclusion on how to regulate trading of the asset in Thailand.

“Very glad to see this outcome. It seems to be a very highly anticipated decision, and a lot of members of the public have written to the SEC regarding this matter, so I’m very glad to see that we are not going to discriminate against people based on income. Digital assets or cryptocurrency in general is supposed to be about breaking barriers and providing possibilities. I’m glad we are going to still be able to do that,” said Proud Limpongpan, chief strategy officer at Thailand’s leading cryptocurrency exchange, Zipmex.

She was responding to the SEC’s April 1 resolution regarding qualifications for cryptocurrency investors. The SEC stipulated that investors must have experience or training in cryptocurrencies before they will be allowed to trade. The SEC also requires business operators to provide advice on cryptocurrency asset allocation to ensure that investors understand the risks.

Previously, the SEC had indicated it would impose a minimum annual income requirement of Bt1 million for digital currency investors. The proposal was meant to prevent lower-income and inexperienced investors from being exposed to cryptocurrencies, whose value can fluctuate wildly. However, it was withdrawn after crypto users complained it would exclude the majority of Thais from the market and defeat cryptocurrencies’ potential to democratise access to financial services.

Impact of new SEC resolution

Instead, the SEC’s knowledge-based regulation is likely to boost cryptocurrency trading and related activities across society.

The new rules require crypto exchanges to provide a knowledge test and education for prospective investors.

No changes were needed to Zipmex’s business model to meet the new regulations, said Proud.

“We are already extremely serious about education in the industry. Not only is there a learning page on our website, but we also hold weekly Facebook Live education seminars, contribute educational content to our partners, and hold in-person teaching events. We will be rolling out more videos and easy-to-understand reports. We treat the industry the same way that international financial houses treat it,” she said.

Proud added that Zipmex imposes a suitability test on investors.

“If someone performs badly, we let them know that this is a risky asset and they should learn more about it first,” she added.

Zipmex currently has 12,000 prospective investors on its waiting list, according to Proud.

It also takes “know your customer” (KYC) processes very seriously, with suitability tests designed to detect fraudulent investors or those blacklisted for money laundering.

“We also use bank-account whitelisting, which means you can only transfer money in and out of one account,” she added.

The rewards (and risks) of Thailand’s big bet on cryptocurrency

As more people and businesses invest in digital currencies, the Bank of Thailand (BOT) faces the delicate task of trying to balance financial stability and investor protection on the one hand while promoting innovation in financial services on the other. Determined to push ahead, the BOT began piloting its own prototype digital currency scheme last year.

The SEC recently suspended digital asset exchange Huobi and demanded that it upgraded its system. Huobi is among six digital asset trading exchanges operating in Thailand.

The market is also closely monitoring the Bank of Thailand, which began developing a wholesale central bank digital currency (CBDC) three years ago. The BOT is now looking at developing a retail CBDC for use by the general public. The central bank is inviting businesses and the general public to provide feedback and suggestions for the move by June 15.

Global investors bet big on crypto  

Diogo Monica, co-founder and president of digital asset platform Anchorage, recently told CNBC news that institutional investors replaced retail investors as the main factor driving rising prices of digital currencies last year.

As a result, in the 12 months up to April 1, Bitcoin skyrocketed 800 per cent to US$59,151. Meanwhile, this year Ethereum has jumped 161 per cent to $1,939 and Litecoin 64 per cent to $204, as of April 1.

Institutional investors JPMorgan Chase, Citigroup and BlackRock, the world’s largest asset manager, are reportedly trading in cryptocurrencies, while Goldman Sachs will offer customers crypto investments in the coming months.

Elsewhere, users of payment giant PayPal and Square’s Cash App have now been given the green light to buy and sell digital assets.

By Thai PBS World’s Business desk


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