The Thai SEC says the total number of crypto accounts rose by nearly 300% over the course of the last 180 days.
Thailand currently lays claim to one of the more regulated crypto trading markets in the world, with exchanges having to adhere to strict regulatory standards. For example, at the start of the year, Bitkub, the country’s largest cryptocurrency exchange, was shut down by regulators after the trading platform faced a series of lengthy service outages.
Despite these seemingly stringent conditions, the country’s crypto market has continued to thrive. That being said, a tipping point came recently when Thailand’s Securities and Exchange Commission released a statement that it plans to enact a 1 million baht (about $33,000) minimum annual income requirement for crypto investment in the country.
The decision was met with immediate backlash from the local investor community — as it would potentially exclude low and middle-income earners from the cryptocurrency market — so much so that the regulatory body had to clarify its above-stated stance within days of making the announcement.
In this regard, the SEC noted that the previous draft document was just a means of gauging investor sentiment, with Ruenvadee Suwanmongkol, secretary-general of the Thai SEC, claiming: “I proposed the criteria that many considered too tough to prompt people to express their opinions on the matter and did not intend to say these are the exact qualifications that will be implemented.”
Providing his thoughts on the matter, Mr.Pinpraaj Chakkaphak, CEO of local cryptocurrency exchange ERX, told Cointelegraph that the original intention of the SEC was not malicious but one that sought to create a mechanism that could help protect investors from any unwarranted market risks, adding:
“We understand the good intentions of the SEC. However, many stakeholders in the digital assets market and the majority of the public disagree with the plan. From ERX’s point of view, this protection mechanism should not focus on minimum income, instead, it should come in the form of improved information disclosure by operators and investor education.”
Regulations should not impede market growth
To gain a better overview of the situation, Cointelegraph spoke with Konstantin Anissimov, executive director at CEX.IO, one of the most widely used crypto exchanges in Thailand. In his opinion, by taking a stance that potentially hampers lower-income families from gaining access to a potentially lucrative investment class, the SEC was going against the very fundamentals of a free-market economy and freedom of choice.
However, on the other hand, he did concede that if a majority of the lower-income population did not have any basic financial education and understanding of the risks of such investments, the SEC’s approach may have been the only way to protect the public’s best interests. Anissimov added:
“Multiple approaches can be taken and minimum income is just one of them. I am sure that Thai SEC will take on the feedback received from the investment community and act in the interest of its population.”
Additionally, in a statement shared with Cointelegraph, Dr. Akalarp Yimwilai, CEO of a local crypto trading platform Zipmex, pointed out that he sincerely believes that the proposed draft law comes from a place of good intent and that it serves to protect investors by minimizing unnecessary risks.
He highlighted that the Thai crypto market is still in its infancy and that regulations around the space have only come into being around three years ago. As a result, the SEC is still looking to craft a legal framework for this asset class that can protect investors from future risks. However, Yimwilai did go on to say:
“The proposed draft aims to protect but it is important to also see that in doing so, a higher wall is being proposed which limits the opportunity of access to digital assets for many in this country. The key here I believe is to work hand in hand with the SEC to ensure the sustainability and height of that wall.”
Lastly, he believes that if the current draft was to get implemented, it could potentially lead to a substantial rise in the number of scams, potentially driving investors into an unregulated market where they could run into uncharted territory. Not only that, it could also lead to a lot of much-needed capital flowing out of Thailand, resulting in the long-term detriment to the country’s development and finances.
The Thai crypto market has been booming
The Thai digital assets industry has grown significantly during recent months. According to the country’s SEC, the number of cryptocurrency trading accounts within the county has risen from 160,000 at the end of 2020 to 470,000 on Feb 1. Not only that, approximately 50% of these accounts are owned by investors younger than 30 years of age.
Furthermore, Chakkaphak pointed out that crypto trading volumes in November 2020 lay at 18.44 Billion THB, compared to 100.90 Billion in February 2021, thus showcasing a staggering increase of 447.18% within a matter of just three months. He went on to add:
“Investors wanting to invest in the traditional stock market or in digital assets should educate themselves and do in-depth research. Our priority is to enable and educate investors to learn and build knowledge about investing in digital assets, as it is a new opportunity for all investors.”
Also, according to Yimwilai, Zipmex traded $1 Billion in 2020 in Thailand, with the figure expected to grow exponentially in 2021. Not only that, the cryptocurrency exchange was also able to raise $6 million in fresh funding from U.S.-based VC from Jump Capital.
He further highlighted that the assets under the company’s management are currently valued at around $100 Million, which seems to back up the notion that the Thai masses are ready to dive head into the burgeoning crypto sector.
Do things look promising?
Though for now, the SEC seems to be backtracking on its initial outline for market entry requirements, according to the Suwanmongkol, people who are putting their hard-earned money into cryptocurrencies are mostly new investors who may not be fully aware of the risks that come with investing in high-risk, highly volatile assets. “If the SEC just stands by and does nothing, it would be totally our responsibility if investors lose on cryptocurrency”, she added.
Lastly, the SEC reportedly had a dinner talk with representatives from local digital exchanges recently, suggesting that the government agency may still be looking to consult prominent members from within the space. The final hearing, regarding the matter, will take place on March 24 before the survey finally closes on March 27.