A closer look at the crypto industry in Thailand
Thailand’s crypto industry has been steadily growing in recent years. This success is partially thanks to the government’s increased support for the sector.
In 2018, the Thai government legalized cryptocurrencies and introduced a regulatory framework to oversee crypto-related activities in the country. Since then, Thailand has become a popular destination for crypto startups like Bitcoin casinos, trading exchanges, and payment gateways.
With that said, below is an outlook of the entire crypto industry in Thailand. Let’s get started.
Why Is the Crypto Industry Growing So Fast in Thailand?
Various reasons fuel the rapid growth of Thailand’s crypto industry. In addition to favourable government policies, there are many other factors. Here are a few reasons behind this rapid expansion.
Government Support
One of the primary factors behind the growth of the crypto industry in Thailand is the government’s pro-crypto stance. The government has been proactive in creating a regulatory framework that encourages the development of the sector.
The Securities and Exchange Commission (SEC) has been developing rules for initial coin offerings (ICOs) and digital asset exchanges.
The Bank of Thailand has also been exploring the possibility of developing a central bank digital currency (CBDC). It is currently conducting pilot tests. These regulatory developments provide a clear and supportive environment for the growth of the crypto industry.
Demand for Digital Assets
There is an increasing demand for digital assets. Thailand’s population is becoming increasingly tech-savvy. There is a high level of smartphone penetration and internet access.
As a result, more people are turning to digital assets as a way to invest, transfer money, and make purchases online. COVID-19 accelerated the adoption of digital payments. Many businesses and consumers seek alternative payment methods to avoid physical contact.
Increase in Innovative Startups
The crypto industry’s growth in Thailand can also be linked to innovative startups in the sector. Thailand is home to a vibrant startup ecosystem.
Many of these companies focus on developing new technologies and applications for blockchain and cryptocurrencies. They are attracting significant investment from both local and international investors, helping to fuel the growth of the sector.
The Rise of DeFi Applications
The rise of decentralized finance (DeFi) applications has fuelled the demand for digital assets in Thailand. DeFi has gained significant popularity globally, with users leveraging blockchain technology to access decentralized financial services. You can use it for lending, borrowing, and trading. In Thailand, DeFi has seen rapid adoption. Several local projects have developed innovative solutions for the sector.
Decentralization
One of the main features distinguishing cryptocurrencies from traditional currencies is that they operate on decentralized systems. Instead of being controlled by a single entity, like a government or a central bank, cryptocurrencies are maintained by a network of nodes. Each one has a copy of the blockchain ledger.
This decentralization makes it difficult for any party to manipulate the system. It promotes transparency and simplicity. Additionally, decentralization can make transactions faster and cheaper. There is no need for intermediaries like banks or payment processors.
Security
Cryptocurrencies use advanced encryption techniques. This security feature makes cryptocurrencies more resistant to fraud and hacking. This leads to increased confidence in the technology.
The use of blockchain technology means that a network of nodes verifies transactions. The risk of manipulation is minimal.
Additionally, the use of private and public keys means that only the owner of a particular cryptocurrency wallet can access and transfer the funds. This is an additional layer of security.
Potential for High Returns and Low Transaction Fees
Many Thai investors are drawn to the potential for high returns that the crypto industry offers. Cryptocurrencies have experienced significant price increases in recent years, which has attracted more investors.
This potential for high returns is due to the limited supply of many cryptocurrencies. This can drive up demand and increase prices. Additionally, the volatile nature of the crypto market means that prices can fluctuate rapidly, creating opportunities for traders to make profits.
The use of blockchain technology and peer-to-peer networks means that cryptocurrencies can be transferred with lower transaction fees than traditional financial systems. For example, international wire transfers can be costly and take several days to process. On the other hand, cryptocurrency transactions can be completed quickly and at a lower cost.
Increased Adoption by Businesses
More businesses now accept crypto payments. This acceptance is quickly promoting mainstream adoption. Top companies already accept cryptocurrency payments. They invest in awareness and trust in the technology.
The crypto industry is becoming more accessible to a wider range of people. For example, some platforms now allow you to purchase cryptocurrencies with a credit card. They make it easier for those without a bank account to invest.
Hedge Against Inflation
Some people see cryptocurrencies as a hedge against inflation. It is a way to protect their wealth from economic uncertainty. This is because cryptocurrencies are not tied to any government or central bank. Their value is not subject to inflationary pressures caused by policies such as quantitative easing.
Growing Ecosystem
The crypto industry is supported by a growing ecosystem of developers, entrepreneurs, and investors in Thailand. They are constantly building new applications and use cases for cryptocurrencies.
This ecosystem is creating new opportunities for investment and innovation. It is driving the growth of the industry.
Challenges Facing the Crypto Industry in Thailand
Although Thailand has been recording a surge in cryptocurrencies adoption, it has its fair share of challenges. Here are a few of the biggest ones.
Lack of Regulatory Clarity
The Thai government has made efforts to regulate the crypto industry. Its efforts include issuing licenses to cryptocurrency exchanges and drafting regulations for ICOs.
However, the regulations are still not very clear. There is still some confusion and ambiguity. There is also a need for more consistency in the way that different government agencies approach cryptocurrencies. It is frustrating for businesses and investors trying to navigate the regulatory landscape.
Security Concerns
Cryptocurrency exchanges and wallets have been the target of numerous cyberattacks. As a result, investors have suffered significant losses. In 2018, one of Thailand’s largest cryptocurrency exchanges, Coincheck, was hacked. The attack resulted in the loss of over $32 million worth of cryptocurrencies.
There have been other cases of scams and fraud related to cryptocurrency. They have reduced confidence in the industry and discouraged investors. For example, in 2020, a Thai actor was arrested for his involvement in a cryptocurrency scam that defrauded investors of around $33 million.
