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While US regulators are still trying to figure out how to think about cryptocurrencies, the Thai government is already mapping its digital currency to the central bank.
This is just one of many examples of how Thailand has emerged as the most interesting criptovaluti and blockchain countries in Southeast Asia in 2018.
From the beginning of the year, the Thai government is has become increasingly explicit and welcoming towards cryptocurrency projects and exchanges. Within a few months, the Thai regulators have made significant progress, from the establishment of licenses for cryptocurrency companies to trade permits and ICOs. More importantly, the country has attracted foreign companies by providing clear and explicit guidelines for operating with foreign blockchain companies. It is a pattern we are observing throughout Southeast Asia and one that the founders of blockchain and cryptocurrency should take note of as they think about global expansion.
Regulators in Southeast Asia are keen to understand cryptocurrency and blockchain
To understand how a small country like Thailand can move so quickly in the blockchain space, it is crucial to understand the strategy of regulators and local companies. Unlike their US peers, most Asian blockchain companies and exchanges work with local regulators right from the start, even when they are building their products and developing their communities. These teams use formal and informal relationships to get buy-ins from their local governments in order to strengthen their credibility. This scheme is particularly true for the countries of Southeast Asia such as Thailand.
However, it is not just startups that seek to forge ties with government officials – these relationships work in both directions. Take for example Pundi X, which is a technology company that builds a blockchain-based point of sale solution in Southeast Asia and globally. Its CEO, Zac Cheah, is Malay and local in the Southeast Asian region and has discussed with me how regulators engage with the startup community:
I think the government is dying and changing and many governments that we know you do not know exactly what we say are late. In fact, they have like people, young or old, who are very well informed about what is happening right now. In fact, sometimes, when we go to the main blockchain meetings, we actually see some very important people on the regulatory side […] know that this will change the landscape a lot so I think they are trying to think through, if I can, the "tokenomics" of how they want to be involved. "
No more Thaied up in regulation
These types of regulatory commitments are encouraging signs for the region and in particular for Thailand, where regulators have worked quickly to provide a legal path for blockchain and cryptocurrency technologies. [19659002] In June, the Thai government legalized seven cryptocurrencies (Bitcoin, Ethereum, Bitcoin money, Ethereum classic, Litecoin, Ripple and Stellar), and allowed a limited number of cryptocurrency and broker-dealer exchanges to request Operating licenses: Subsequently, in July, the SEC of Thailand authorized further issuers of digital tokens to submit applications In the same month, the securities regulatory body classified the ICOs into three types: investment tokens, utility and cryptocurrency As it should be clear from this timeline, the speed at which these regulators make decisions has surpassed that of mag most of the western countries and the rest of Asia.
Part of that speed is that in Thailand regulators have shown an openness to the exchange of knowledge. For example, recently Thailand SEC held a dialogue with Vitalik Buterin and the OmiseGo team on the status of exchanges and initial coin offerings (ICO). For Thailand, having a local, well-informed and well-established team like Omise is very useful for creating a clear regulatory environment for companies.
Photo by Juan Antonio Segal used under Creative Commons.
Indeed, we are seeing foreign companies that are already starting to gravitate towards the encryption of Thailand, with western and eastern companies looking for opportunities in the country. At the beginning of July, Bithumb, the second largest cryptocurrency exchange in Korea, announced that it intends to open in Thailand after receiving regulatory approval requested by the local government. IBM and Krungsri, one of Thailand's largest financial institutions with 8.6 million credit cards, personal finance and sales loans, have announced a $ 140 million commitment to build digital banking, including blockchain technology. The cryptic momentum will probably continue in Thailand, and other announcements and developments should come in the second half of the year
Not only has it become open to private cryptocurrency companies, but the Thai government is also testing its blockchain technologies. For example, it allowed the Thai Bond Market Association to create a "BondCoin", a personalized token on a private blockchain between authorized participants including issuers and investors alongside regulators and registered companies.
So just last week, Bank of Thailand (BOT) outlined a preliminary roadmap for "Project Inthanon", its central bank digital currency initiative (CBDC). This is following similar projects initiated by other central banks, including the Bank of Canada, the Hong Kong Monetary Authority and the Singapore Monetary Authority. 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 collaborate on the design and development of a proof-of-concept prototype for the transfer of wholesale funds through the issuance of the Central Bank digital currency. Wholesale (CBDC wholesale). "
Phase 1 of the Inthanon project will involve the development and testing of the main payment functions as a liquidity saving and risk management mechanism. It is expected to be completed by the first quarter of 2019 and its result will be very significant on Thailand's progress in Southeast Asia.
Building strong local Thais
For new companies entering the region, it could become increasingly difficult to include. Traditionally, much of doing business successfully in many parts of Asia requires the formation of the right connections and business relationships. With the evolution of the blockchain space, regulators are establishing more stringent requirements and higher standards to accept additional tokens and exchanges in the country. They will probably be influenced by the decisions of existing teams with whom they already have a relationship. That dynamics is something that cryptocurrency companies should think about while building their communities in Asia, as the more established countries may not necessarily provide most of the opportunities.
One good thing is that we are still in the relatively early stage of adoption in Southeast Asia, and each country in the blockchain adoption phase is in different phases. Healthy competition between the nations of Southeast Asia is still ongoing, and this could benefit newcomers. That said, the strategies used to enter one of these markets will almost certainly change and become mature when these opportunities were very green.
In the long run, it is very possible for many cryptocurrency companies and blockchain to develop a codependency with their respective local government. This does not only apply to Thailand and Asia, but also to the rest of the world. The regulators of each region will further promote their interest and form allies with local token companies. So, for a project that is thinking globally, forming a relationship too tight with a small set of regulators can bring the company in directions that it would otherwise not want.
Ultimately, for a cryptocurrency company that enters any foreign market, it is important for your team to have a multi-country strategy to avoid developing prejudices and becoming overly influenced by a local government. However, to be successful locally, field teams will also need to be very knowledgeable and experienced in understanding the corporate culture and regulatory environment.
As Thailand shows, land is rapidly changing to which countries are more open for business blockchain and cryptocurrency and adapting to these changing market dynamics are critical to the success of startups and businesses in space.
