Crypto Competition Heats Up


Representations of cryptocurrencies can be seen in this illustration taken on January 24. The global cryptocurrency market has collapsed since early this year. (Reuters photo)

After months of market contraction and falling prices, Thailand’s digital asset landscape is poised for fierce competition, with new players lining up to enter the industry amid increasingly strict regulations.

The global cryptocurrency market is expected to stagnate for the next 6-12 months as US interest rate policy and market balance sheet cuts signal liquidity. Many investors are resolving their disputes after several crypto platforms went bankrupt while issues brought down Thailand’s two major crypto exchanges, undermining investor confidence.

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While the outlook for the external market is not as rosy as last year, internal factors have also worsened crypto sentiment, causing a number of investors to scale back their positions as well.

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Investors were unable to withdraw funds from the Zipup+ platform after Zipmex, which operates in Singapore, Thailand, Australia and Indonesia, experienced a liquidity crisis after its exposure to Babel Finance and Celsius Network deteriorated.

The collapse of Siam Commercial Bank (SCB)’s plan to buy Bitkub Online (BO) impacted the price of Bitkub’s KUB coin. Bitkub has also been hit by changes from the Securities and Exchange Commission (SEC) for non-compliance with the regulator’s digital asset listing rules. BO and five members of the digital asset selection committee were each fined approximately 2.5 million baht.

Active SEC data indicates that the number of crypto trading accounts in Thailand fell to 260,000 at the end of June, from 692,000 in January. The value of crypto exchanges fell from 120 billion baht in January to 71 billion in June, averaging just 2.37 billion baht per day.

Last Thursday, the SEC decided to restrict its rules for advertising digital assets. As of September 1, for example, announcements of digital assets must not contain false, distorted or exaggerated information, or anything that could cause misunderstanding among the public.

In addition, an announcement must contain the investment risks and all necessary information, with balanced views for those who want to make investment decisions. Volatile cryptocurrencies can now only be advertised on official channels.

Poramin Insom, founder of Satang Corporation, said current crypto market conditions are similar to those of other risky assets, with the global economic slowdown and rising interest rates having a significant impact.

The domestic crypto market has also been hit by regulatory issues and a drop in investment sentiment. The market is dominated by large players, while smaller players are at a disadvantage, he said.

The new players are not necessarily financial institutions, but large companies, such as the alliance formed between Gulf Energy Development and Binance, the largest crypto exchange in the world.

Peeradej Tanruangporn, chairman of the Thailand Digital Asset Operators Trade Association and director of Upbit Thailand, said the arrival of major new players will increase competition in the crypto exchange industry and could lead to consolidation of operators.

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According to Coingecko.com, the cryptocurrency’s market cap peaked at $2.9 billion in November 2021 and fell by 70% to about $1 billion.

crypto market

The global crypto market has collapsed since the beginning of the year due to macroeconomic factors and concerns about tight liquidity.

Attempts to curb inflation with a series of sharp rate hikes in the United States led to remittances from risky assets to the relative safety of the dollar market.

According to Coingecko.com, crypto market capitalization peaked at about $2.9 billion in November 2021, but has since fallen 70% to about $1 billion.

In Thailand, the number of investors active in trading continued to decline, from about 260,000 in July.

Thailand’s largest crypto exchange Bitkub fell victim to the collapse of SCB’s bid to buy a 51% stake for 17.8 billion baht.

In November last year, the board of directors of SCB Securities Co, a subsidiary of SCB X, approved BO’s acquisition of Bitkub Capital, but on August 25, the two parties canceled the agreement due to regulatory issues.

On August 30, the SEC fined Samret Wayanasathian, Chief Technology Officer at Bitkub Blockchain Technology, for allegedly using inside information to buy KUB coins in connection with SCB’s attempted takeover of BO.

BO, a subsidiary of Bitkub Capital Group Holdings, remains the largest player in the market with over 90% share, followed by Zipmex Thailand. The rest of the Thai market is made up of smaller digital exchanges such as Satang Pro, Upbit, Z.ComEX and other digital asset brokers such as Bitazza and Kulap.

Last Thursday, the SEC was ordered to pay a 1.92 million baht fine to Zipmex, the Singapore-based digital asset exchange provider, for two Digital Assets Act violations. According to the SEC statement, Zipmex has suspended all or part of its digital asset trading service from July 20 to July 28 without complying with the trading rules, conditions and methods.

From July 20 to August 25, Zipmex suspended the service of withdrawing its customers’ assets in its Trade Wallet and Z Wallet, which the SEC found that it did not meet professional standards.

With Bitkub and Zipmex stung by negative news, the condition of the Thai crypto market has deteriorated. It remains to be seen whether the entry of major players like the Gulf-Binance alliance will convince new investors to trade as volume remains low.

The Gulf-Binance alliance has not applied for a marketing authorization and the process may take some time.

Investing in an unregulated exchange of digital assets carries high risks, as the SEC cannot assist in legal proceedings and investors have to bear the losses themselves in the event of damage.

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Representations of the cryptocurrencies Bitcoin, Ethereum, DogeCoin, Ripple, Litecoin will be placed on the PC motherboard in this illustration price June 29, 2021. REUTERS

Increasing competition

Gulf Energy Development said it would increase its investments in blockchain ecosystems to diversify its revenue streams, even as Thai regulators tighten oversight of fintech and related platforms amid a fall in the value of many tokens. The alliance with Binance is expected to apply for a license in the third quarter of this year.

A crypto industry source who asked for anonymity said new entrants are coming backed by large companies, especially telecommunications companies that have both the technology and customer base of fixed systems and mobile devices to increase their user base.

Control source True Corporation to forecast any moves in this business as Advanced Info Service (AIS) is likely to join the Gulf-Binance partnership. Gulf currently owns approximately 46% of Intouch Holdings Plc, the parent company of AIS.

Co-founded by Charoen Pokphand (CP) Group heir Chatchaval Jiaravanon, Upbit is a potential joint venture partner for True, the telecommunications giant controlled by CP’s Chearavanont family.

Bank entry

SCB has applied for three digital asset trading licenses through its subsidiary SCB Securities: for a digital asset exchange, a digital asset brokerage for cryptocurrency and digital tokens.

SCB has expanded its investments into technology companies and startups through its subsidiary SCB 10X, SCB’s technology investment holding company.

SCB 10X has created Token X, which is licensed for ICO (Initial Coin Offering) portal activities.

Even after SCB canceled its deal with Bitkub Online, Thailand’s oldest lender still holds the digital licenses.

Kasikornbank (KBank) entered the digital asset space through its subsidiary, Kasikorn Business Technology Group, which invests in technology companies and startups.

KBank has established another subsidiary, Kubix Digital Asset Cloud, which is licensed to be an ICO portal.

Krungthai Bank (KTB) has entered the digital asset business through KT XSpring Co. Its joint venture Krungthai XSpring is licensed to operate a digital asset brokerage, which is not yet operational.

KTB entered the digital sector through its “Pao Tang” app, an open digital platform accessible to more than 33 million people.

The state bank has also developed a Krungthai Gold Wallet service with MTS Gold, which trades gold through the Pao Tang app.

Pao Tang provides digital distribution of corporate bonds through the app and bond sales for PTT Exploration and Production, Minor International and Sansiri.

Bank of Ayudhya has also expressed interest in entering the digital asset space through its subsidiary Krungsri Finnovate, which owns 1% of Zipmex and invests in other tech companies and startups.

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