preface
Web3 technology is developing rapidly and attracting widespread attention around the world. Governments, enterprises and developers are actively exploring and promoting Web3 applications. For example, innovations in the financial field of cryptocurrency and decentralized finance (DeFi), as well as the application of non-fungible tokens (NFT) in the art and entertainment industries, have shown great potential. Web3 not only brings innovation in technology, but also has far-reaching impacts on 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 makes Thailand a regional leader in the adoption and innovation of Web3 technology. In particular, in areas such as blockchain applications, cryptocurrency trading, and decentralized finance, Thailand has shown great potential and competitiveness.
Aiying Aiying uses this Tiger Research report to summarize the current status, challenges and opportunities of Thailand's Web3 market, revealing 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, it helps everyone understand how Thailand has risen in the Web3 wave and explores its future development path.
It is hoped that this report can provide valuable reference and inspiration for policymakers, corporate decision makers and industry participants.
1. Overview of Thailand’s Web3 Market
political backgroung
Despite the complex political environment in Thailand, the 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 have provided 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 government actively promotes 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, creating 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 “Emergency Act on Digital Asset Business 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 Act on Digital Asset Business 2018". The Act mainly covers the following contents:
-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”.
-Regulatory agency: The Securities and Exchange Commission (SEC) of Thailand is empowered 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. Licensing application requirements and their impact
Exchange License
-Application conditions: Digital asset exchanges must be registered in Thailand, with a minimum capital requirement of 50 million baht (approximately $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 transparent and compliant transactions.
- 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, with a minimum capital requirement of 25 million baht (approximately US$675,000), and cannot place customer orders into their own accounts.
- Brokers: The minimum capital requirement is 5 million baht (about 135,000 US dollars), 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 must undergo preliminary review by the ICO platform and submit 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 to ensure the legitimacy of the project and investor protection.
- Investor protection: The investment limit for retail investors is no more than 300,000 baht (about 8,100 US dollars) per person per ICO project, and 30% of the total ICO amount is limited to 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 a mechanism 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, etc.
- 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 the Thai 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 in and active participation in cryptocurrencies.
- Government support: The Thai government actively promotes cryptocurrency transactions. From 2024, profits from cryptocurrency and digital token transactions will be exempted from 7% value-added tax, which further stimulates 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 see cryptocurrency investment as an opportunity to change their economic situation.
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 investments in the Web3 field through a number of subsidiaries.
2. DeFi Market: Participation and Driving Factors of Thailand’s DeFi Market
The Thai DeFi market also shows 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 driving factors: 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 high returns. This high speculative tendency is the main driving factor for the 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 have 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.
- Seven legal ICO platforms: They play an important role in promoting project financing and protecting the rights and interests of investors. The due diligence and review mechanism of the platform effectively improves the transparency and credibility of ICO projects.
- Operational model: The ICO platform provides services such as project evaluation, risk control and technical support to ensure the legitimacy of the project and the safety of investors. This model helps to establish a good market order and promote the healthy development of the ICO market.
4. Investor characteristics: high speculative tendency and market activity
The high speculative tendency and activeness of investors in the Thai market make it an important market for the application and development of Web3 technology. Investors' expectations for high returns and strong interest in digital assets have made Thailand an important player in the global Web3 market.
IV. Challenges and Opportunities
1. Challenges
- Complexity of the regulatory environment: Although Thailand is at the forefront of the regulation of Web3 technology, the complexity of the regulatory environment remains a major challenge for market participants. The ever-changing policies and regulations require companies to maintain a high degree of compliance and flexibility.
- Shortage of technology and talent*: The development of Web3 technology requires a large number of high-quality technical talents. However, Thailand is relatively short of professional talents in the field of blockchain and encryption technology, which limits the development speed of the industry.
- Market education and investor protection: Despite the active market, many investors do not understand Web3 technology and related risks.
How to improve market education and protect the rights and interests of investors is a long-term challenge facing the industry.
2. Opportunities
- Government support and policy incentives: The Thai government's active support for Web3 technology and policy incentives provide important opportunities for market development. The government's pro-cryptocurrency policies and regulatory measures have attracted a large number of investors and businesses to participate.
- Market potential and demand: The high demand and activity of the Thai market for cryptocurrencies and DeFi provide a broad market space for enterprises and developers. Especially in the field of retail cryptocurrency trading and DeFi, the market participation and potential are huge.
- International cooperation and technological exchange: Thailand actively participates in international cooperation and technological exchange, introduces advanced technologies and experiences, and provides strong support for the development of Web3 technology. Through cooperation with leading global companies and institutions, Thailand is able to accelerate technological innovation and application promotion.
V. Conclusion
Thailand has performed well in the development of Web3 technology and has become a leader in Southeast Asia. The government's active support, a sound regulatory framework and active market participants have jointly promoted the rapid development of Thailand's Web3 market. Despite some challenges, such as the complexity of the regulatory environment and the shortage of technical talents, Thailand's market potential and policy incentives provide huge opportunities for future development.
Through continued policy support, market education and international cooperation, Thailand is expected to achieve greater success in Web3 technology and digital economy and become an important participant and innovator in the global Web3 market. This report hopes to provide valuable reference and inspiration for policymakers, corporate decision makers and industry participants to jointly promote the prosperity and development of Thailand's Web3 market.
