Blockchain Research
Thailand’s SCB pivots away from crypto
Did Thailand’s Siam Commercial Bank (SCB) have a crystal ball handy when it nixed a plan to acquire the troubled Thai crypto exchange Bitkub? The deal, announced in the late-stage crypto bull market of November 2021, had been on thin ice for months. Then came the announcement on August 25: The 17.8-billion-baht (US$536,000) deal was off. In a statement, SCB cited Bitkub’s “various issues” it was sorting out with Thai regulators as the reason the deal was being scrapped. On August 30, it became clear that the issues were serious.
Assessing CBDC progress in Southeast Asia
When Cambodia swiftly launched its retail central bank digital currency (CBDC) Project Bakong, it seemed that other Southeast Asian countries might also make similar moves. Yet in the nearly two years since Bakong went live in October 2020, not a single nation in the region has launched a CBDC of its own. Even the pilot programs are proceeding slowly. It seems that the hype around digital fiat currencies is subsiding and governments are worrying less about whether their nations will be left behind in the next generation of finance and more about if a CBDC offers clear benefits that justify its costs.
Is Thailand souring on crypto?
Crypto believers will point to Thailand recently greenlighting four new digital assets companies to say that the kingdom remains a booster of decentralized virtual currencies. These include Krungthai XSpring, a crypto broker affiliated with one of the country’s leading banks, crypto exchange T-BOX Thailand, crypto adviser and fund manager Coindee and Leif Capital Asset Management, which also manages funds. We reckon Thailand is not going to crack down on crypto as China and India have, but the digital assets’ freewheeling days in the kingdom are quickly winding down. Tighter regulation is inevitable given retail investors’ recent losses in the digital assets market.
Digital transformation at SCB hits a snag
Digital transformation at incumbent banks is all well and good, but maybe making a huge bet on crypto as a traditional lender is still a bit risky. At least that is the sense we get from Thailand’s Siam Commercial Bank (SCB) and its digitally forward holding company SCB X. While many aspects of SCB’s pivot to fintech are proceeding smoothly, the planned acquisition of the crypto exchange Bitkub is not. The deal was supposed to be concluded by now, but it appears SCB is having second thoughts about it.
Baby steps for Japan’s CBDC
Surprise, surprise: Japan is in no hurry to issue a digital yen. In a June report that declared proof of concept in the first-phase study, the Bank of Japan (BOJ) repeated its stance that it has “no plans to issue” a CBDC, though the Japanese central bank believes it is “important to be prepared thoroughly to respond appropriately to any future changes in the environment.” Talk about a general statement. The BOJ’s stance has to be viewed within the wider context of CBDC development in Asia, especially the underwhelming performance – at least in relation to the hype surrounding it – of China’s digital renminbi.
2022 is turning out to be the worst crypto bear market yet. Bitcoin’s price is hovering around US$20,000 while most traders of the paramount cryptocurrency traders are underwater and continuing to sell at a loss. The dismal crypto market conditions – and how they highlight decentralized digital currencies’ inherent volatility – are forcing regulators in many Asian countries to consider tightening relevant regulations. However, there are exceptions, and the Philippines is a notable one. Cryptocurrencies remain very popular in the country; trading is still brisk and regulators have yet to signal a tougher stance.
Singapore has been viewed as the most likely crypto hub in Asia after China’s crackdown on decentralized virtual currencies effectively ended Hong Kong’s prospects for taking on such a role. The city-state has never been that gung-ho about the idea though. Its regulators recognize crypto offers certain opportunities to Singapore, but they also are aware of its inherent volatility. The current crypto bear market and related collapses that are occurring are likely to spur Singapore to take an even more cautious approach to decentralized digital currencies.
K bank’s crypto dependency is a double-edged sword
South Korea’s K bank, the country’s first online lender, has staged an impressive comeback in the past two years, overcoming long-running capitalization problems and growing both its deposit base and loan books at a brisk rate. K bank's loans have grown 1.56 trillion won (US$1.28 billion) per year on average since its launch in 2017 while customers’ average annual savings have reached 2.31 trillion won. A tie-up with leading South Korean crypto exchange Upbit has been a key reason for K bank’s recent fast growth. However, that reliance on Upbit could now become a liability for the digibank.
Perennially sanctioned North Korea has become adept at stealing cryptocurrency to finance its illicit weapon programs. Unlike fiat currency, decentralized digital assets exist outside of the formal financial system, making them easier prey for Pyongyang’s tenacious and skilled hackers. Yet the recent crypto bear market that has seen US$2 trillion in market valuation lost may complicate North Korea’s crypto-funded criminal endeavors.
Australians lost AU$113 million (US$81.5 million) to crypto investment scams in the first five months of 2022, according to new data from ScamWatch cited by consumer watchdog the Australian Competition and Consumer Commission (ACCC). The ACCC noted that most of the reported losses, which occurred in the January 1 to May 1 period, were investment scams, and they rose by 314% (including non-crypto scams) compared to the same period last year. This situation underscores the need for Australia to implement comprehensive regulation for digital assets, as crypto use among Aussies continues to rise steadily.
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India's crypto market is hurting
It has not been the best few months for India’s cryptocurrency market. New tax legislation is putting a damper on trading and investment, which are also taking a beating amid a broader crypto bear market. At the same time, fintech funding in India may finally dry up – a least for a while – as investors tighten their belts.
When will India launch the digital rupee?
In February, Indian finance minister Nirmala Sitharaman said that the Reserve Bank of India (RBI) would launch a central bank digital currency in the 2022-23 fiscal year. In her budget speech, she said that introducing a digital rupee would give a big boost to the digital economy and lead to a more efficient and cheaper currency management system. Yet since then, there has been no obvious progress on India’s CBDC project, and even some measured pushback against the idea.
South Korea’s new president Yoon Suk-yeol entered office planning to make his country friendlier to cryptocurrency. During his campaign, Yoon said, “To realize the unlimited potential of the virtual asset market, we must overhaul regulations that are far from reality and unreasonable.” Though Yoon likely remains keen to carry out his campaign promises about crypto, it will be no easy task. He faces conservative, crypto-skeptical financial regulators, a parliament controlled by South Korea’s main political opposition, the Democratic Party of Korea, and now the fallout over the abrupt collapse of the TerraUSD stablecoin.
Crypto is making inroads in the Philippines
The Philippines is taking a different approach to crypto than many other Asian countries, most notably in a tentative acceptance of the use of decentralized digital currencies for payments. Thailand, Vietnam and Indonesia have all banned crypto for payments outright, while Singapore has licensed just a handful of companies to use digital assets for payments.