In recent years, developments in the blockchain and cryptocurrency industry have been spearheaded by leading FinTech hubs such as Hong Kong, Switzerland, and Singapore. But today, emerging economies in Southeast Asia are making waves of their own with countries such as Thailand now leading the charge in blockchain regulations and cryptocurrency ownership.
Riding the positive momentum, prominent cryptocurrency exchange OKEx has launched support for Thai baht-crypto trading, while other foreign exchanges have also made initial forays into the crypto-friendly Thai market. Noting the strong demand for the nascent digital asset, the government implemented crypto regulations in as early as June 2018 and has recently given the green light for blockchain-based securities issuance and trading. With these latest developments in mind, Thailand is racing ahead to become the de facto powerhouse in the region.
In light of this, I had the chance to speak to one of Thailand’s leading tech innovators and entrepreneurs in the blockchain space, Nithinan Boonyawattanapisut, who is also the CEO and Co-Founder of HotNow. Along with HotNow’s founding members, Nithinan helped Thailand’s Security and Exchange Commission (SEC) during the drafting of their crypto regulations. In this exclusive interview, we discussed the regulatory side of blockchain in Thailand, the progress and hindrance of blockchain and ICO, and what the future holds.
I have been in the game development industry for over 14 years. I first started my game development center in Shanghai back in 2006, which has now grown to 400 developers in-house. Recently, my company has also established a joint venture with True Corporation under the name “True Axion Interactive” for game development, and this effort will go into building a capable game development center in order to make Thailand the game development hub of Southeast Asia. Given that more than one-third of the global population are gamers, I had the idea to bridge those gamers to the real-world retail and commercial industry, allowing brands and businesses to advertise through all these game content and asset through in-game advertising technology in order to push forward commercial messages to gamers on a real-time basis. This is where digital marketing and online gaming meet.
On the advertising side, when brands try to strategize how they plan their marketing spending, the end goal is always to see the purchase actions. Brands want to be able to measure their Return on Investment (ROI) and the actual conversion result. With things still being online and offline, measurability of results hasn’t been easy and insightful. The most those brands can see is how many clicks and views came from a post. There is no simple way to tell from which specific channels the sales are made. By having blockchain tracking it all the way from impression click to redemption details, we are able to offer those brands and advertisers more insightful KPIs. The second quality of blockchain is its transparency. As blockchain is a technology based on distributed ledger concept, it’s easier for brands to keep track of the processing workflow from third party agencies that are providing services for them.
Back when Bitcoin value was going crazy, everyone was very enthusiastic jumping into “investing” in crypto coins with the hope of making quick money. But, the majority of them barely had any clue or proper information about what they were getting themselves into. Because of this, a lot were losing money and getting scammed. People weren’t aware there were a lot of bad ICOs and grey area out there. Upon seeing this, Thai’s SEC got really concerned and they saw the urgency to address this matter with proper rules and regulations to protect investors against something they don’t know. They formed a committee and started engaging many experts to help them better understand cryptos and ICOs. They spent a huge amount of time studying this field and gaining knowledge from the U.S., Canada, Switzerland’s regulations with the goal of extracting best practices to be adopted in Thailand. However, they realized that the problems are not only in Asia or Thailand specifically; in fact, these developed countries were also still lacking proper policies and regulations for the crypto and ICO space. Due to this, SEC knew they had to come up with the rules themselves. Frankly speaking, other developed countries in the west are not really ahead in terms of regulation and Thailand is doing pretty well.
Having to come up with entirely new rules and regulations for the cryptocurrency and ICO space no doubt took a tremendous amount of time and effort. The SEC didn’t want to just shut down the whole cryptos and ICO thing because they saw this as a good alternative for SMEs and startups to raise money. With the future of blockchain, SMEs and startups can raise money from the public instead of having to go to venture capitalists (VCs) or getting controlled by those people.
Besides announcing that they wanted to deal with cryptos and ICOs, the SEC also was also considering whether they want to securitize the assets using tokenization or even allow security token offering.
Many countries like Singapore are too friendly towards this space. People can just come out and establish their own ICOs freely - they’re too friendly until it’s not. In my opinion, I think it’s too permissive. With Thailand coming up with clear sets of rules, framework, and guideline in which they separate things very clearly with utility token, cryptocurrency, and security token, companies that want to be involved in this crypto business can follow the right track and the right framework. There’s no other country in Asia or in the world that has this clear sets of regulations as Thailand.
Many countries in Southeast Asia are still very cash-based and are made up of unbanked people. People don’t really understand and are not educated enough about blockchain yet. Sometimes, the word “blockchain” even scares people away. Realistically speaking, blockchain technology does not hold any harm or damage, and it can be used to establish financial credit for the unbanked.
In terms of risks, there’s no risk of using blockchain technology at all. The damage that people should be aware of is investing in a crypto coin when they want to speculate the value of the coin without knowing the real business behind the coin. That’s where the real danger comes from and that’s why SEC has to come in to protect those people from falling for traps. Cryptocurrency is just a product of the underlying technology which is blockchain. You can build a lot of products on blockchain but the thing is, a lot of the products are bad while a few are good. And the danger on the consumer side is only when they invest their money into the failing product.
As far as the application of business and usage of blockchain in the real world is concerned, even though now the rule is clearer on the security side with SEC, there are still unclear rules on the revenue department. Many businesses and corporates are still unsure of how they can deal with a digital asset on their accounting book. Even though Thailand is ahead in terms of regulations, the rest of Southeast Asia with Thailand included, is also facing this very same issue: If a company chooses to adopt a blockchain product or a blockchain currency, how does the company recognize this on its book? A lot of the auditors out there are not even equipped to deal with this matter. In Thailand, I don’t think any of the big 4 is ready to deal with crypto asset on corporate book yet. As far as I know, only Deloitte is willing to do an audit for companies that are involved in cryptos.
It’s no brainer for any new businesses or big businesses to implement this technology into their existing business. But in terms of friction, big enterprises tend to have more politics within the organization. So, if you’re talking about the speed of adoption, my guess would be, the smaller companies or SMEs will adopt this technology first. For adoption by big corporations, I see the technology being adopted a lot in the field of finance and supply chain management.
When it comes to blockchain, people either believe it or disregard it as a fraud. Thailand though, not only has taken a friendlier approach towards the blockchain and cryptocurrency space, but it is also leading the global stage in terms of government support and regulatory guideline. Whether Thailand will be the leading forefront of the blockchain technology adoption, only the next few years will tell.