Author: AiYing Compliance
Web3 technology is developing rapidly around the world and has attracted widespread attention. Governments, enterprises and developers are actively exploring and promoting the application of Web3. For example, cryptocurrency and decentralized finance (DeFi) have become important innovations in the financial field, and NFT (non-fungible tokens) have also shown great potential in the art and entertainment industries. Web3 has not only brought innovation in technology, but also triggered far-reaching impacts at the economic and social levels, promoting the development of the digital economy and the transformation of the global economic structure.
In Southeast Asia, Thailand, as a leader in the Web3 market, has performed particularly well. Thailand has a sound digital asset regulatory system, active market participants, and strong technical and financial infrastructure. This puts Thailand at the forefront of the region in the adoption and innovation of Web3 technology. In particular, in areas such as blockchain applications, cryptocurrency trading, and decentralized finance, Thailand has demonstrated great potential and competitiveness.
Aiying aims to summarize the current status, challenges and opportunities of Thailand's Web3 market through this Tiger Research report, and reveal Thailand's core advantages and development prospects in this emerging field. By studying Thailand's regulatory environment, market participation, and specific measures taken by companies and developers, we will help everyone understand how Thailand has risen in the Web3 wave and explore its future development path. We hope that the interpretation and analysis of this report will provide valuable reference and inspiration for policymakers, corporate decision makers, and industry participants.
1. Thailand Web3 Market
political backgroung
Despite the complex political environment in Thailand, the Thai government has shown a positive and supportive attitude towards digital assets and blockchain technology. The government's pro-cryptocurrency policy and support for Web3 technology provide a favorable political environment for the development of Thailand's Web3 market. For example, the Securities and Exchange Commission of Thailand (SEC) and the Bank of Thailand (BOT) introduced a series of regulatory measures in 2018 and 2021, respectively, to regulate and promote the development of cryptocurrencies and related businesses. These measures provide legal protection and a clear regulatory framework for the application of Web3 technology in Thailand, which will help attract the participation of domestic and foreign companies and investors.
Economic Background
Thailand is one of the important economies in Southeast Asia and is known as the "New Tiger of Asia". According to 2023 data, Thailand's GDP reached US$512.2 billion, making it the second largest economy in Southeast Asia, second only to Indonesia. Thailand's per capita GDP ranks second among Southeast Asian countries, second only to Singapore. However, Thailand also faces some economic challenges, such as political turmoil, an aging population, and income inequality.
Nonetheless, Thailand shows great potential in the digital economy. The Thai government is actively promoting digital transformation and hopes to achieve economic growth through the development of Web3 technology and digital asset markets. Especially during the epidemic, the demand for the digital economy and online services increased significantly, which created new opportunities for the application of Web3 technology.
II. Regulatory Framework
1. Thailand’s digital asset regulatory system
Thailand’s digital asset regulatory system is one of the most complete and systematic in Southeast Asia. The establishment of its regulatory framework began in 2018, when the Thai government promulgated the Digital Asset Business Emergency Act 2018. This act marked an important step for Thailand in the field of digital assets and blockchain technology, making it the first country in Asia to systematically regulate ICOs and other digital asset businesses.
2. Implementation of the 2018 Emergency Act
In May 2018, the Thai government promulgated the Emergency Decree on Digital Asset Businesses B.E. 2561. The bill mainly covers the following aspects:
Defining and classifying digital assets: Digital assets are divided into two categories: cryptocurrencies and digital tokens. Cryptocurrencies such as Bitcoin and Ethereum are defined as "electronic information units issued based on distributed ledger technology (DLT)". Digital tokens are defined as "virtual assets that represent rights to a specific blockchain project."
Regulators: The Securities and Exchange Commission (SEC) of Thailand has been given the power to regulate the digital asset market and is responsible for approving and supervising digital asset exchanges, brokers, dealers and other related businesses.
Licensing system: The bill requires that all businesses involving digital assets must obtain a license from the Thai SEC, including digital asset exchanges, brokers, traders, ICO issuers and ICO platforms.
3. License application requirements and their impact
Exchange License:
Application conditions: Digital asset exchanges need to be registered in Thailand, with a minimum capital requirement of 50 million baht (about $1.35 million). In addition, exchanges must ensure the security of customer assets, with more than 90% of assets stored in cold wallets.
Operational regulations: Exchanges must comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations to ensure that transactions are transparent and compliant.
Impact: This regulatory measure has improved market transparency and security, attracted more investors and institutions to participate, and laid the foundation for the healthy development of Thailand's digital asset market.
Digital Asset Brokers and Traders:
Brokers: Must be registered in Thailand, have a minimum capital requirement of 25 million baht (approximately US$675,000), and cannot place client orders on their own accounts.
Traders: The minimum capital requirement is 5 million baht (about US$135,000), mainly for professional investors.
Impact: By clarifying the responsibilities and requirements of brokers and dealers, the Thai SEC effectively regulates market behavior and prevents market manipulation and other improper practices.
4. ICO regulatory measures and their impact
ICO issuance:
Approval process: ICO issuance is subject to preliminary review by the ICO platform and submission of a registration statement to the Thai SEC, including a business plan, white paper, use of funds, and financial statements. The SEC has 60 days to review and decide whether to approve it.
Issuing Platform: Issuing only through SEC-approved ICO platforms ensures the legitimacy of the project and investor protection.
Investor Protection: Retail investors are limited to investing no more than 300,000 baht (about US$8,100) per person per ICO project, and are limited to 30% of the total ICO volume for general subscription.
ICO Platform
Application conditions: ICO platforms must be registered in Thailand, with a minimum capital requirement of 5 million baht (approximately US$135,000) and have mechanisms to prevent conflicts of interest.
Responsibilities: Conduct project due diligence, technical review, anti-money laundering duties, investor suitability assessment, fund management and information disclosure supervision.
Impact: The establishment of the ICO platform and the strict approval process have improved the transparency and legitimacy of ICO projects, enhanced investor confidence, and promoted the steady development of Thailand’s ICO market.
3. Market Overview
1. CEX Market: Current Status and Trends of Retail Cryptocurrency Trading in Thailand
Thailand has shown extremely high activity in retail cryptocurrency trading. According to data from 2023, the number of Thai cryptocurrency exchange users reached 2,949,445, while the number of stock market accounts in the same period was only 2,526,530. This phenomenon reflects the Thai public's strong interest and active participation in cryptocurrency.
Bitkub’s dominance: Bitkub Exchange is a major player in the Thai market, accounting for about 95% of trading volume. As the first company to obtain a digital asset exchange license, Bitkub is not only far ahead in terms of trading volume, but its parent company, Bitkub Capital Group Holdings, has also made extensive arrangements in the Web3 field through multiple subsidiaries.
Government support: The Thai government has actively promoted cryptocurrency transactions. From 2024, profits from cryptocurrency and digital token transactions will be exempted from 7% value-added tax, a policy that has further stimulated market vitality.
Market drivers: The high participation in Thailand’s cryptocurrency trading market is mainly driven by high convenience, government incentives, and severe income inequality. Thailand’s trading system allows all bank accounts to transfer money to exchanges, making trading very convenient. In addition, income inequality has prompted many Thais to view cryptocurrency investment as an opportunity to change their economic situation.
2. DeFi Market: Participation and Driving Factors of Thailand’s DeFi Market
The Thai DeFi market has also shown significant activity, with participants accounting for approximately 20% of CEX participants. This ratio is extremely rare in other countries and reflects Thai investors’ high speculative tendencies and expectations for high returns.
Main drivers: According to research by Tiger Research and Kyros Ventures, the average expected return of Thai investors is as high as 10 times, indicating that they are willing to take higher risks in pursuit of higher returns. This high speculative tendency is the main driver of high participation in the DeFi market.
Popular DeFi projects: Arbitrum is currently the most popular DeFi project in Thailand, followed by Optimism and other projects. DeFi projects further attracted investor participation through airdrops and liquidity mining activities.
3. ICO Market: Thailand ICO Platform and Its Operation Model
Thailand’s ICO market is strictly regulated, with seven legally operating ICO platforms, mainly operated by subsidiaries of financial companies. These ICO platforms play a key role in the issuance, consulting and technical support of ICO projects.
Major ICO Platforms
Token X: A subsidiary of SCBX, providing a full range of services from token issuance consulting to blockchain technology support. Successfully issued the "BNK48 Governance Token", a utility token used in the entertainment industry.
Kubix: A subsidiary of Kasikorn Bank, it managed the financing project for the movie "Love Destiny" and issued the investment token "Destiny Token".
XSpring Digital: A subsidiary of XSpring, it issued the investment token "SiriHub Token" and obtained a digital asset broker and dealer license to support digital asset trading.
ICO project examples:
BNK48 governance token: issued by Thai entertainment company iAM. Through the iAM48 application, fans can participate in voting and enjoy various benefits, strengthening the interaction between fans and artists.
Destiny Token: Issued by GDH 559, it is used to raise funds for the movie "Love Destiny". Investors can get returns based on the film's revenue and enjoy the right to participate in special events.
4. OTC trading: legality and growth
Thailand’s OTC trading market is legal and growing rapidly, mainly serving institutional investors. Bitazza is a major player in this space, holding a digital asset broker license and rapidly launching services to capture the market.
Market characteristics: OTC trading is favored by institutional investors due to its ease of operation and compliance, especially for handling large transactions. Retail investors can also participate, but due to the high threshold (Bitazza requires a minimum order amount of US$30,000), retail participation is relatively small.
Major Players: Bitazza dominates the market, processing trade orders through global exchanges or dealers, offering more flexibility and trading varieties than digital asset exchanges.
Market Potential: With the increasing demand for OTC transactions from enterprises, Thailand's digital asset broker market shows great growth potential. Accurate pricing and efficient transaction execution are key factors for market success.
4. Market Segment Analysis
1. Game market:
Thailand's Web3 game market shows great growth potential, especially in the field of mobile games. Thailand's smartphone penetration rate reached 71.47% in 2023 and is expected to rise to 97% by 2028, providing a solid user base for the development of Web3 games.
Major games: World-renowned Web3 games such as Nightcrow, Mir4, and Axie Infinity are very popular in Thailand. However, local game developers have relatively little experience in developing original games, resulting in lower game quality.
Mode shift: As the popularity of the Play-to-Earn (P2E) model decreases, user behavior has changed. Players are more inclined to cash out their in-game earnings immediately. In response to this change, hybrid mode games, such as Night Raven, which combines Web2 and Web3 elements, are emerging as a new development trend.
2. NFT Market:
Thailand’s NFT market has also experienced a decline in trading volume amid a global market downturn, but individual artists’ works and a few blue-chip projects still maintain an active community.
Individual Artists: Young Thai artist Gongkan’s art NFTs have received widespread attention for their unique style and creativity, and have even been praised by Apple CEO Tim Cook, further increasing the popularity of his work.
Blue chip projects: Projects such as Pudgy Penguins and Azuki have built strong local communities in Thailand and have maintained high engagement levels through regular events despite the overall market cooling.
Government involvement: The Tourism Authority of Thailand (TAT) launched the "Wonderful Thailand NFT" project, which combines the T2E (Travel to Earn) model, where tourists can collect art NFTs by visiting specific attractions and use them to enjoy tourism-related discounts. This innovative project demonstrates the combination of blockchain technology and the tourism industry.
3. Infrastructure:
Thailand's Web3 infrastructure is constantly developing. BNB Chain currently dominates the market, but emerging chains such as Arbitrum, Optimism, and Ronin are also gradually emerging. BNB Chain: BNB Chain has a wide range of applications in Thailand due to its EVM compatibility, strong developer community, and support from the Binance ecosystem.
Emerging chains: Arbitrum has performed strongly in the DeFi field, while Ronin and Optimism have risen in the GameFi field. Thailand's Bitkub Chain is also supporting Web3 games and has launched games such as "Morning Village", showing a trend of diversified development.
Local Chain: Most Thai local chains are private chains for regulated businesses, Bitkub Chain is the only public chain that operates as an Ethereum hard fork mainnet and plans to expand globally in Southeast Asia.
4. Custody and wallet services:
Thailand’s digital asset custody service market is gradually taking shape, although in the early days no projects applied for custody service licenses due to market uncertainty and high capital requirements.
Key players: As the market picks up, companies such as RakkaR Digital and Orbix Custodian have begun applying for custody service licenses. These companies provide customers with secure digital asset custody services and meet strict regulatory requirements.
Market dynamics: While global hosting providers such as Fireblocks have captured a certain share of the Thai market, market competition is expected to intensify with the launch of local licensed hosting services.
Non-custodial wallets: MetaMask is the most widely used non-custodial wallet in Thailand, similar to the situation in other countries.
5. Developer Ecosystem:
Although not as large as its neighboring countries, Thailand’s developer community is growing rapidly with support from companies and universities.
Support projects: For example, Bitkub Chain holds a monthly "BKC Developer Promotion Meeting" to provide funding for potential projects and supports developers through "BKC Developer Tools". This developer-friendly strategy demonstrates its commitment to promoting the development of the local blockchain ecosystem.
University role: Major universities such as Chulalongkorn University, Chiang Mai University, and Thammasat University are actively involved in cultivating blockchain talent and operating their own blockchain societies, demonstrating a strong interest in the Web3 industry.
Digital nomads: Thailand has attracted a large number of digital nomads due to its long-term visas and low cost of living, which has a direct and indirect driving effect on the development of the IT industry.
6. Enterprise measures:
Thailand's Web3 industry is mainly driven by traditional financial and energy companies, which, with the support of the government, are actively investing in Web3 projects.
Main companies:
SCBX: Through its subsidiaries SCB 10X, Token X and InnovestX, it makes extensive investments in the Web3 space, including ICO platforms, digital asset exchanges and custody services.
Kasikorn Bank: Actively involved in digital asset investment analysis, NFT market and digital asset trading through subsidiaries such as KX (Kasikorn X), Kubix and Orbix Trade.
Gulf Energy Development: Partners with Binance to operate the Gulf Binance digital asset exchange.
PTT Group: Operates blockchain-based renewable energy trading platform ReAcc.
Bitkub: Thailand's leading blockchain technology and digital asset company, with extensive layout in the Web3 field through multiple subsidiaries, including Bitkub Chain and Bitkub Exchange.
Challenges and opportunities
challenge
1. Political instability
Background: Thailand has experienced 19 military coups since becoming a constitutional monarchy in 1932. The most recent coup took place in 2014, and although a pro-crypto government came to power in 2023, Thailand’s political environment remains uncertain.
Impact: Political turmoil may lead to policy discontinuity and changes in the regulatory environment, affecting market confidence and investors' long-term planning.
2. Aging population
Background: Thailand has an aging population, with the median age of 40.5 years in 2023, much higher than neighboring Vietnam (32.8 years) and Laos (24.4 years).
Impact: An aging society may lead to labor shortages, weakened innovation capabilities, and slower economic growth, which will affect the talent supply and technological innovation in the Web3 market.
3. Income inequality
Background: Thailand has a serious income inequality problem and extremely uneven wealth distribution. High income inequality may lead to social instability and insufficient consumption capacity.
Impact: Although income inequality has prompted some people to actively invest in cryptocurrencies, the lack of overall spending power may limit the further expansion and popularity of the market.
opportunity
1. Young leadership
Background: Despite Thailand’s aging population, the development of the Web3 market is mainly driven by young leaders in their 30s, such as the leadership teams of Bitkub and Cryptomind.
Impact: These young leaders have a high acceptance of new technologies, strong innovation capabilities, and can quickly adapt to market changes, promoting the development and popularization of Web3 technologies.
2. Government support policies
Background: The Thai government is actively promoting the development of the digital economy and Web3 technology. Pro-cryptocurrency policies, VAT exemption on profits from digital asset transactions, and support for blockchain technology are all important measures taken by the government to promote market development.
Impact: The government’s supportive policies have provided a favorable market environment, attracted a large number of domestic and foreign investors and enterprises to participate, and helped to enhance market confidence and accelerate technological innovation.
3. Participation of traditional financial institutions
Background: Thailand’s traditional financial institutions, such as SCBX, Kasikorn Bank, and Gulf Energy Development, are actively participating in and investing in Web3 projects, establishing digital asset subsidiaries and funds.
Impact: The participation of traditional financial institutions not only brings abundant resources and financial support, but also accelerates the popularization of Web3 technologies and applications through their broad customer base and market influence.
Summarize
In the process of rapid development, the Thai Web3 market, despite facing challenges such as political instability, aging population, and income inequality, shows great opportunities and development with young leadership, government support policies, and the active participation of traditional financial institutions. power. Thailand has established a comprehensive and strict digital asset regulatory system through the Digital Asset Business Emergency Act of 2018. The clear regulatory framework regulates market behavior, improves market transparency and security, and attracts a large number of investments and corporate participation. Various areas such as cryptocurrencies, ICOs, DeFi, retail cryptocurrency exchanges, NFT markets, and growing infrastructure and custody services have shown significant potential and activity, positioning Thailand to take a leading position in the Web3 industry in Southeast Asia and globally.
In addition, according to Aiying, the Thai government announced on May 29 the launch of a new visa category for digital nomads and freelancers. The Thai government has launched a new Thai Destination Visa (DTV) for foreigners who want to work and vacation. The DTV costs $270 (10,000 baht) and is valid for five years. The DTV has a stay period of 180 days, which can be extended for another 180 days for the same fee, and the holder can work in Thailand for nearly 12 months at a time. The visa stipulates that for those working remotely in Thailand, at least approximately $13,650 (500,000 baht) must be provided as a support guarantee for spouses and children.
