Crypto

Thailand is becoming a critical country for blockchain

Comment

Image Credits: https://www.gettyimages.com/search/photographer?family=creative&photographer=Seksan+Srikasemsuntorn (opens in a new window) / Getty Images

While United States regulators are still trying to figure out how to think about cryptocurrencies, Thailand’s government is already mapping out its own central bank digital currency.

This is just one of numerous examples how Thailand has emerged as one the most interesting cryptocurrency and blockchain countries in Southeast Asia in 2018.

Since the start of the year, the Thai government has become increasingly outspoken and welcoming of cryptocurrency projects and exchanges. In just a few months, Thai regulators have made notable progress, from setting up cryptocurrency company licenses to permitting exchanges and ICOs. More importantly, the country has attracted foreign companies by providing clear and explicit guidelines for foreign blockchain companies to operate. It’s a pattern that we are seeing across Southeast Asia, and one that blockchain and cryptocurrency startup founders should take note as they think about global expansion.

Southeast Asia regulators are keen to understand cryptocurrency and blockchain 

To understand how a small country like Thailand can move so quickly in the blockchain space, it’s crucial to understand the strategy of regulators and local companies. Unlike their U.S. peers, most Asian blockchain companies and exchanges work with local regulators right from the beginning, even as they are first building their products and growing their communities. These teams use formal and informal relationships to get buy-in from their respective local governments in order to bolster their credibility. This pattern is particularly true for Southeast Asian countries such as Thailand.

However, it isn’t just startups that are trying to curry ties with government officials – these relationships work in both directions. Take for example Pundi X, which is a technology company building out a blockchain-based point of sale solution in Southeast Asia and globally. Its CEO, Zac Cheah, is Malaysian and local to the Southeast Asia region, and discussed with me how regulators are engaging with the startup community:

I think government is morphing and changing and many governments that we know are not you know exactly the ones that we say that are lagging behind. They, in fact, have like people, young or not so young people, that are very knowledgeable about what is happening right now. So in fact sometimes when we go to core blockchain meetups, we actually see some very core people from the regulatory side […] they know that this will change the landscape a lot so I think they are trying to think through the, if I may, the ‘tokenomics’ of how they want to get involved.”

No longer Thaied up in regulation

These types of regulatory engagements are encouraging signs for the region and particularly for Thailand, where regulators have been working quickly to provide a legal path for blockchain and cryptocurrency technologies.

In June, Thailand’s government legalized seven cryptocurrencies (Bitcoin, Ethereum, Bitcoin cash, Ethereum classic, Litecoin, Ripple, and Stellar). It has also permitted a limited number of cryptocurrency exchanges and broker-dealers to apply for operating licenses. Then in July, the Thailand SEC permitted additional digital token issuers to file for applications. In the same month, the securities regulator categorized ICOs into three types: investment tokens, utility tokens, and cryptocurrency. As should be clear from this timeline, the speed at which these regulators execute decisions has surpassed that of most countries in the West as well as the rest of Asia.

Part of that speed is that in Thailand, regulators have shown an openness to knowledge exchange. For example, recently the Thailand SEC held a dialogue with Vitalik Buterin and the OmiseGo team on the status of exchanges and Initial Coin Offerings (ICOs). For Thailand, having a local, knowledgeable, and well-established team such as Omise is very helpful to building a clear regulatory environment for companies.

Photo by Juan Antonio Segal used under Creative Commons.

In fact, we are seeing foreign companies already starting to gravitate towards Thailand’s crypto opportunity, with both Western and Eastern businesses seeking opportunities in the country. In early July, Bithumb, the second largest cryptocurrency exchange in Korea, announced that it plans to open in Thailand after receiving the required regulatory approval from the local government. IBM and Krungsri, one of Thailand’s largest financial institutions with 8.6mn credit cards, sales finance, and personal loan accounts, announced a five-year $140 million engagement to build out digital banking, including blockchain technology. The crypto momentum will likely continue in Thailand, and more announcements and developments should come in the second half of the year.

Not only has it become open to private cryptocurrency companies, but the Thailand government is also testing its own blockchain technologies. For example, it has allowed the Thai Bond Market Association to create a “BondCoin,” a custom token on a private blockchain between permissioned participants including issuers and investors alongside regulators and registered firms.

Then just last week, Bank of Thailand (BOT) outlined a preliminary roadmap for ‘Project Inthanon,’ its central bank digital currency (CBDC) initiative. This is following similar projects initiated by other central banks, including the Bank of Canada, the Hong Kong Monetary Authority and the Monetary Authority of Singapore. BoT plans to work with eight participating banks to start building a prototype. The announcement of Project Inthanon says: “The BOT and the participating banks will collaboratively design and develop a proof-of-concept prototype for wholesale funds transfer by issuing wholesale Central Bank Digital Currency (Wholesale CBDC).”

Phase 1 of Project Inthanon will involve development and testing of key payment features such as a liquidity-saving mechanism and risk management. It is expected to be completed by the first quarter of 2019, and its outcome will be very telling of Thailand’s progress in Southeast Asia.

Building strong local Thais?

For new companies going into the region, it may become increasingly more difficult to enter. Traditionally, a large part of doing business successfully in many parts of Asia requires forming the right connections and business relationships. As the blockchain space evolves, regulators are establishing more stringent requirements and higher standards to accept additional tokens and exchanges into the country. They’ll likely be influenced in their decisions by existing teams that they already have a relationship with. That dynamic is something cryptocurrency companies should think about as they build out their communities in Asia, as the most established countries may not necessarily provide the most opportunities.

One positive though is that we are still in the relatively early stage of adoption in Southeast Asia, and every country in the blockchain adoption phase is at different stages. A healthy competition between Southeast Asian nations is still brewing, which may benefit newcomers. That said, the strategies used to enter one of these markets will almost certainly change and mature compared to when these opportunities were very green.

In the long run, it’s very possible for many cryptocurrency and blockchain companies to develop a codependency with their respective local government. This doesn’t just apply to Thailand and Asia but to the rest of world too. Each region’s regulators will want to further advance their own interest and form allies with local token companies. So for a project that is thinking globally, forming too close of a relationship with a small set of regulators may pull the company in directions that it otherwise would not want to.

Ultimately, for a cryptocurrency company going into any foreign markets, it is important for one’s team to have a multi-country strategy to avoid developing biases and become overly influenced by one local government. However, to succeed locally, the teams on the ground will also have to be very deeply knowledgeable and experienced in understanding the business culture and regulatory environment there.

As Thailand proves, the ground is changing rapidly on which countries are most open for blockchain and cryptocurrency business, and adapting to these changing market dynamics is critical to the success of startups and companies in the space.

More TechCrunch

Copilot, Microsoft’s brand of generative AI, will soon be far more deeply integrated into the Windows 11 experience.

Microsoft Build 2024: All the AI and hardware products Microsoft announced

Hello and welcome back to TechCrunch Space. For those who haven’t heard, the first crewed launch of Boeing’s Starliner capsule has been pushed back yet again to no earlier than…

TechCrunch Space: Star(side)liner

When I attended Automate in Chicago a few weeks back, multiple people thanked me for TechCrunch’s semi-regular robotics job report. It’s always edifying to get that feedback in person. While…

These 81 robotics companies are hiring

The top vehicle safety regulator in the U.S. has launched a formal probe into an April crash involving the all-electric VinFast VF8 SUV that claimed the lives of a family…

VinFast crash that killed family of four now under federal investigation

When putting a video portal in a public park in the middle of New York City, some inappropriate behavior will likely occur. The Portal, the vision of Lithuanian artist and…

NYC-Dublin real-time video portal reopens with some fixes to prevent inappropriate behavior

Longtime New York-based seed investor, Contour Venture Partners, is making progress on its latest flagship fund after lowering its target. The firm closed on $42 million, raised from 64 backers,…

Contour Venture Partners, an early investor in Datadog and Movable Ink, lowers the target for its fifth fund

Meta’s Oversight Board has now extended its scope to include the company’s newest platform, Instagram Threads, and has begun hearing cases from Threads.

Meta’s Oversight Board takes its first Threads case

The company says it’s refocusing and prioritizing fewer initiatives that will have the biggest impact on customers and add value to the business.

SeekOut, a recruiting startup last valued at $1.2 billion, lays off 30% of its workforce

The U.K.’s self-proclaimed “world-leading” regulations for self-driving cars are now official, after the Automated Vehicles (AV) Act received royal assent — the final rubber stamp any legislation must go through…

UK’s autonomous vehicle legislation becomes law, paving the way for first driverless cars by 2026

ChatGPT, OpenAI’s text-generating AI chatbot, has taken the world by storm. What started as a tool to hyper-charge productivity through writing essays and code with short text prompts has evolved…

ChatGPT: Everything you need to know about the AI-powered chatbot

SoLo Funds CEO Travis Holoway: “Regulators seem driven by press releases when they should be motivated by true consumer protection and empowering equitable solutions.”

Fintech lender SoLo Funds is being sued again by the government over its lending practices

Hard tech startups generate a lot of buzz, but there’s a growing cohort of companies building digital tools squarely focused on making hard tech development faster, more efficient and —…

Rollup wants to be the hardware engineer’s workhorse

TechCrunch Disrupt 2024 is not just about groundbreaking innovations, insightful panels, and visionary speakers — it’s also about listening to YOU, the audience, and what you feel is top of…

Disrupt Audience Choice vote closes Friday

Google says the new SDK would help Google expand on its core mission of connecting the right audience to the right content at the right time.

Google is launching a new Android feature to drive users back into their installed apps

Jolla has taken the official wraps off the first version of its personal server-based AI assistant in the making. The reborn startup is building a privacy-focused AI device — aka…

Jolla debuts privacy-focused AI hardware

OpenAI is removing one of the voices used by ChatGPT after users found that it sounded similar to Scarlett Johansson, the company announced on Monday. The voice, called Sky, is…

OpenAI to remove ChatGPT’s Scarlett Johansson-like voice

The ChatGPT mobile app’s net revenue first jumped 22% on the day of the GPT-4o launch and continued to grow in the following days.

ChatGPT’s mobile app revenue saw its biggest spike yet following GPT-4o launch

Dating app maker Bumble has acquired Geneva, an online platform built around forming real-world groups and clubs. The company said that the deal is designed to help it expand its…

Bumble buys community building app Geneva to expand further into friendships

CyberArk — one of the army of larger security companies founded out of Israel — is acquiring Venafi, a specialist in machine identity, for $1.54 billion. 

CyberArk snaps up Venafi for $1.54B to ramp up in machine-to-machine security

Founder-market fit is one of the most crucial factors in a startup’s success, and operators (someone involved in the day-to-day operations of a startup) turned founders have an almost unfair advantage…

OpenseedVC, which backs operators in Africa and Europe starting their companies, reaches first close of $10M fund

A Singapore High Court has effectively approved Pine Labs’ request to shift its operations to India.

Pine Labs gets Singapore court approval to shift base to India

The AI Safety Institute, a U.K. body that aims to assess and address risks in AI platforms, has said it will open a second location in San Francisco. 

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

1 day ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says