From Tax Breaks to B2GC: How Thailand is Becoming a Crypto Hub

A crypto revolution is underway in Thailand, bolstered by the country’s strategic location in Southeast Asia, which makes it an appealing destination for crypto companies and investors. Beyond Thailand’s geographical advantage, the current government is adopting friendly policies that offer relative comfort for crypto practitioners, guaranteeing more safety and sustainability, compared to other regions worldwide.

Thailand ranks among the world’s top ten most crypto-friendly nations in terms of adoption. It was one of the first nations to regulate the crypto industry, taking a cue from the unfortunate events resulting from the collapse of Luna and Terra in South Korea. The Thai government focused on users’ protection in its regulatory approach while allowing the sector to develop.

Thailand Adjusted Its Crypto Tax Policy in 2024

One significant step the Thai government took recently to support the crypto industry is to adopt a tax exemption policy for crypto users. Early this year, the country’s Finance Ministry announced the exemption of value-added tax (VAT) on digital asset trading. The decision was reportedly aimed at promoting digital assets as a new alternative tool for fundraising and to drive the growth of the digital asset industry in Thailand.

Further reports noted that this policy implies that the responsible agencies would only tax crypto users on earnings from investment tokens, meaning that crypto investors can remove profits from that section when calculating their income tax.

Notably, the Thai government’s friendly approach towards the crypto industry aims to bolster the nation’s digital economy. According to reports, the Thailand Securities and Exchange Commission (SEC) is targeting capital mobilization via investment tokens to reach 18.5 billion baht this year. Therefore, the implementation of the new tax regime, which focuses on income earned from holding or transacting in investment tokens, provided the tax was deducted from the source, as explained by Dr. Kulaya Tantitemit, the Thailand Director-General of the Revenue Department.

Thailand’s Reviewed Tax Law Incentivizes Investors

Many prospective investors see this new tax system as an incentive in the burgeoning digital token sector of the Thai economy. To provide more details, the new tax rule means that the government won’t demand any more income tax from individuals who profit from holding investment tokens after deducting the initial 15% withholding tax.

Analysts consider Thailand’s novel tax rule a strategic move that would enable the government to achieve its target of injecting approximately $3.7 billion into the Thai economy over the next two years. It underscores how the Thai government prioritizes the digital economy, emphasizing the importance of creating a conducive environment for its growth and expansion.

Analysts believe the tax break, in addition to signaling the Thai government’s support for the crypto industry, could attract foreign investors, providing an avenue for a potential capital influx into the market. It would also boost the already thriving crypto adoption within the country despite its current high ranking among the top crypto hubs of the world.

Meanwhile, it is worth noting that the novel tax regime is mainly a catalyst for an already vibrant crypto ecosystem in Thailand. Many crypto exchanges and digital wallets have already established their bases in the country. As a result, Thailand has evolved its regulatory environment to enable a thriving crypto industry, validating its reputation as a favorable hub for crypto entities.

Securities and Exchange Act Under Review

Thailand’s tax exemption policy for crypto investors preceded a Securities and Exchange Act amendment process. Analysts consider the reviewed tax policy an initial step in the rules review process. The amendment reportedly aims to enable digital investment tokens to resemble securities, fostering a more regulated and secure environment for investors. This process helps the government achieve its goal of ensuring stability and resilience in the financial ecosystem while allowing the digital asset market to grow organically.

Entrepreneurs, tech startups, and investors worldwide view the developments in Thailand as a commitment to supporting the growth of the digital economy. The government’s moves put it in the spotlight as a forward-thinking nation willing to allow businesses and investors capitalizing on blockchain technology to thrive. This has led to the nation’s rising recognition as an emerging leader in the blockchain and cryptocurrency sector.

Investor Protection is a Priority in Thailand

It’s also worth noting that the Thailand SEC’s review of the criteria for investing in digital tokens early this year, eased some restrictions. The process, which began in 2023, focused on the principles for improving investment criteria and related criteria for digital asset business operations. It also aimed to establish mechanisms to protect investors while considering the risks associated with digital assets.

The SEC announced the reviewed criteria in January, stating that it had revised the regulations on investment in digital tokens, digital asset depository services, and other regulations related to digital asset business operations. According to the announcement, the new policy aims to ensure that the digital asset regulatory mechanism is adequate and appropriate, can protect investors, and supports the use of digital technology to raise funds for national development.

Notably, the reviewed policy confirmed the lifting of investment restrictions previously imposed on retail investors for digital tokens backed by real estate or generating real estate income streams. Digital tokens with infrastructure operations or revenue streams also faced the restriction of a maximum of 300,000 baht per offering before the reviewed rules.

The Thai SEC updated criteria for crypto practice also included the establishment of custodial wallet providers. With the new policy, such wallet providers were allowed to offer services to digital asset business operators on the condition that the businesses must have major shareholders who may be listed companies or subsidiary companies. The SEC requires such shareholders to possess the expertise and experience in safeguarding clients’ securities or other financial assets.

B2GC: A Landmark Blockchain Event

Earlier this year, the Thai government hosted the “Blockchain to Government Conference (B2GC)” in Phuket. According to the conference’s dedicated website, the B2GC was an official event where the Thai government met with blockchain leaders. The meeting focused on discussing the Thai Digital Wallet Scheme and national blockchain infrastructure as a gateway to a more digital Thailand, delivering tangible benefits to its people.

The conference provided the Thai government with the opportunity to reaffirm its commitment to economic modernization, with blockchain leading the way as a transformative force, reshaping ideas of trust, security, and decentralization. Thailand’s top government agencies, including the Digital Economy Promotion Agency (DEPA), Electronic Transactions Development Agency (ETDA), and the Digital Government Development Agency (DGA) partnered with Finstable, Thailand’s leading blockchain company and innovation center, to host the landmark event.

The event featured some of the top blockchain stakeholders from all over the world, including Ethereum’s co-founder, Vitalik Buterin, EOS Network’s co-founder, Zack Gall, and DFINITY Foundation’s Head of Global Adoption, Emilio Canessa, among several others. Importantly, the conference highlighted the collaborative efforts between the government and the private sector to explore the potential of blockchain technology.

Users’ Perception and Thailand’s Crypto Adoption

Beyond the reviewed tax regime and updated crypto regulations by the Thai SEC, crypto users in the region have noticed other friendly approaches adopted by the government that have enhanced the technology’s adoption. For instance, the government classifies cryptocurrencies as digital assets, meaning users can issue, trade, and exchange them. That also means that crypto users in Thailand can invest in such tokens as digital assets.

Analysts project that the revenue in Thailand’s cryptocurrency market will reach $502.8 million in 2024. However, a longer projection suggests the revenue may drop slightly to $488.9 million by 2025, with an annual growth rate (CAGR 2024-2025) of -2.76%. Based on the recorded figures, the average revenue per crypto user in Thailand in 2024 is estimated at $64.40.

Thailand’s revenue figures highlight the region’s impressive performance as an emerging crypto market, considering analysts expect a more established nation like the U.S. to have a revenue of up to $9.8 billion in 2024. Even more significantly, the adoption projection for cryptocurrency in Thailand looks promising, with the target of reaching 7.84 million users by the end of 2025.

The Crypto Industry’s Projections in Thailand

Meanwhile, available signals point towards an upward trend in Thailand’s crypto adoption. The region’s crypto market penetration rate for 2024 was measured at 10.86%. Analysts expect this figure to increase by 2025, with a target of 10.90% by the end of the year. The positive projections hinge on the government’s role in supporting the crypto industry through active promotion and by creating a favorable environment for participants.

Thailand is known for adopting an open-minded approach to cryptocurrency and digital assets. The nation’s government is credited with supporting innovations in the sector, including participating in pilot programs that aim to promote digital asset adoption. For instance, the Thai government was a founding partner in the mBridge project that involved experimenting with a platform that uses many CBDCs to enable cross-border payments.

The government, through its Central Bank, also expressed support for the use of CBDCs, arguing it would enhance the development of financial service providers, help to accommodate financial innovations, enhance private sector development, and protect the balance between private and public sector financing.