INSUBCONTINENT EXCLUSIVE:
While United States regulators are still trying to figure out how to think about cryptocurrencies, Thailand government is already mapping
out its owncentral 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 regulatorshavemade notable progress, from setting up cryptocurrency company licenses to permitting exchanges and
More importantly, the country has attracted foreign companies by providing clear and explicit guidelines for foreign blockchain companies to
It 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 crucial to understand the strategy of regulators and local companies
Unlike their United States 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 examplePundi X, which is a technology company building outa blockchain-basedpoint of salesolution 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 governmentis morphing andchanging and many governments that weknow are not you know exactly the onesthat we say that
They, in fact, have like people, young or not soyoung people, that are very knowledgeable aboutwhat 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 areencouraging 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 government legalized seven cryptocurrencies(Bitcoin, Ethereum, Bitcoin cash, Ethereumclassic, Litecoin, Ripple, and Stellar)
It has alsopermitted alimited number of cryptocurrency exchanges andbroker-dealersto 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 adialogue with Vitalik Buterin and the OmiseGo team onthe status of exchanges and Initial Coin
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 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 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 ThaiBond Market Associationto create a &BondCoin,& a custom token on a private blockchain
betweenpermissionedparticipants including issuers and investors alongside regulators and registered firms.
Then just last week, Bankof
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
involvedevelopment and testing of keypayment features such as a liquidity-savingmechanism and risk management
It is expected to be completed by the first quarter of 2019, and itsoutcome will be very telling of Thailand 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 partsof Asia requires forming the right connections and business
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 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
Eachregion 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 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
