Thailand is currently claiming one of the more regulated crypto trading markets in the world, with exchanges required to adhere to strict regulatory standards. For example, Bitkub, the country’s largest cryptocurrency exchange, was shut down by regulators earlier this year after the trading platform faced a series of protracted service outages.
Despite these seemingly harsh conditions, the country’s crypto market has continued to develop. However, a turning point recently came when the Thai Securities and Exchange Commission released a statement that it plans to set a minimum annual income requirement of 1 million baht (about $ 33,000) for crypto investments in the country.
The decision was immediately met with backlash from the local investor community as it would potentially exclude low and middle earners from the cryptocurrency market, so the regulator had to clarify its above stance within days of the announcement.
In that regard, the SEC noted that the previous draft document was just a means of measuring investor sentiment. Ruenvadee Suwanmongkol, Secretary General of the Thai SEC, claimed, “I proposed the criteria that many found too difficult for people to express their views on the matter and did not want to say that these are the exact qualifications that are implemented become. “
Pinpraaj Chakkaphak, CEO of the local cryptocurrency exchange ERX, told Cointelegraph that the SEC’s original intent was not malicious, but wanted to create a mechanism that could protect investors from unjustified market risks.
“We understand the SEC’s good intentions. However, many players in the digital asset market and the majority of the public disagree with the plan. From ERX’s point of view, this protection mechanism should not focus on the minimum income. Instead, this should take the form of improved disclosure of information by operators and investors. “
Regulations shouldn’t hinder market growth
To get a better look at the situation, Cointelegraph spoke to Konstantin Anissimov, Executive Director at CEX.IO – one of the most widely used crypto exchanges in Thailand. In his opinion, the SEC violated the foundations of a free market economy and freedom of choice by adopting an attitude that may prevent low-income families from gaining access to a potentially lucrative asset class.
On the other hand, however, he conceded that the SEC’s approach might have been the only way to best protect the public if the majority of the lower-income population lacked a basic financial education and understanding of the risks of such investments. Anissimov added:
“There are several approaches that can be taken and the minimum income is just one of them. I am sure the Thai SEC will take feedback from the investment community and act in the interests of its people. “
Additionally, Akalarp Yimwilai, CEO of a local crypto trading platform Zipmex, indicated in a statement shared with Cointelegraph that he sincerely believes that the proposed bill comes from a place of good faith and is designed to protect investors by minimizing unnecessary risk .
He emphasized that the Thai crypto market was still in its infancy and that regulations related to space only came into effect about three years ago. As a result, the SEC remains committed to creating a legal framework for this asset class that can protect investors from future risks. However, Yimwilai continued:
“The proposed draft is aimed at protection, but it is important to see that it proposes a higher wall that will limit access to digital assets for many in this country. I believe the key here is to work hand in hand with the SEC to ensure the sustainability and height of this wall. “
Finally, he believes that implementation of the current draft could potentially lead to a significant increase in the number of scams and potentially lead investors into an unregulated market where they could break new ground. In addition, it could result in much much-needed capital flowing out of Thailand, which has a long-term negative impact on the country’s development and finances.
The Thai crypto market is booming
The Thai digital asset industry has grown significantly over the past few months. According to the country’s SEC, the number of cryptocurrency trading accounts within the county rose from 160,000 at the end of 2020 to 470,000 on February 1. In addition, approximately 50% of these accounts are owned by investors under the age of 30.
Additionally, Chakkaphak pointed out that the crypto trading volume was THB 18.44 billion in November 2020, compared to THB 100.90 billion in February 2021, an astonishing 447.18% increase in just three months. He added:
“Investors looking to invest in the traditional stock market or digital assets should educate themselves and conduct in-depth research. Our priority is to empower and educate investors to learn and build knowledge about investing in digital assets as it represents a new opportunity for all investors. “
Zipmex was trading for $ 1 billion in Thailand in 2020, according to Yimwilai. Exponential growth is expected through 2021. In addition, the cryptocurrency exchange was able to bring in $ 6 million in new funding from US-based VC firm Jump, Capital.
He also stressed that the company’s assets are currently valued at around $ 100 million, which seems to support the notion that the Thai masses are poised to dive head first into the burgeoning crypto sector.
Do things look promising?
For now, however, the SEC appears to be backtracking on its original draft entry requirements. According to Suwanmongkol, people who put their hard-earned cash into cryptocurrencies are mostly new investors who may not be fully aware of the risks associated with investing in high-risk, highly volatile assets. “If the SEC just stands by and does nothing, it is our responsibility when investors lose cryptocurrency,” she added.
Finally, the SEC reportedly recently had a dinner conversation with representatives from the local digital exchanges, suggesting the government agency may continue to look for prominent members from the room. The final hearing on the matter will take place on March 24th before the poll will be finalized on March 27th.