Thailand SEC Not a Fan of Listed Bitcoin Macro Proxies

Bitcoin on the balance sheet for public companies in Thailand gets a different response from regulators than in the US, explains Varit Bulakul, an executive at Bangkok-listed Brooker Group


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key takeaways

  • Bitcoin on the corporate balance sheet has become a popular trend in the last year for publicly listed companies, but Thailand’s SEC is casting a wary regulatory eye on the practice
  • Thailand continues to be a regional hotspot for crypto adoption, with hundreds of thousands of active users according to reports from its SEC

Companies looking to put bitcoin on their balance sheet in Thailand, one of Asia’s up-and-coming crypto hubs, might be getting a call from the country’s Securities and Exchange Commission. 

Thailand’s SEC has been a keen regulator for the country’s burgeoning digital asset market, recently banning NFTs and meme tokens for their lack of ‘substance’ as Thai’s begin investing in crypto by the hundreds of thousands. As the country’s digital asset market matures, an emerging trend will be for publicly listed companies to put bitcoin on their balance sheets — a trend that MicroStrategy kicked off in September 2020 with its first bitcoin purchase. Now, publicly-listed companies, mainly in the US, Canada, and Europe, own around $75 billion in crypto.

“If you try and become a proxy company, the Thai SEC will definitely investigate that company,” Varit Bulakul, President of the Digital Asset Division of Bangkok-listed The Brooker Group, told Blockworks in an interview. “They don’t really like the company to become a proxy of other assets. They rather have a listed company focusing on the actual core business.”

The Brooker Group, a business consultancy and financial advisory firm, is the “precedent case” for bitcoin on the balance sheet in Thailand, explains Bulakul. It’s also a trailblazer in the accounting treatment for digital assets, which Bulakul says is fairly clear cut  — a trading security, or digital asset inventory, which is already codified in Thai law and profit is marked when the asset is sold — unlike in the US where things can get extraordinarily complicated. And, as it is a precedent case, Bulakul said that the company has gotten a number of calls from the SEC on the topic. 

“They talked to us about this issue, but we informed them that it’s not our goal to accumulate coins and stop doing other businesses. As in the first and second quarter we still generate income from our advisory services, equity investment, and other loan deals,” he explained. “We said we are not going to become a bitcoin or digital asset proxy in the future.”

All this is in contrast to the stance of the US SEC. Hester Peirce, one of its commissioners, has declined to publicly comment on US-listed firms putting bitcoin on their balance sheet, believing it’s an issue between executives and shareholders, not a company and its regulator.

“I don’t want to be in the business of running companies,” she said during last month’s ‘B-Word’ conference, stating that the US SEC was not a “merit regulator.” 

MicroStrategy’s stock is now seemingly divorced from the fundamentals of the company, and critics have pointed out that it’s now tied to bitcoin’s success or failure. But, in the eyes of Peirce, this isn’t a regulatory issue.  

Back in Thailand, Bulakul doesn’t think that the trend of bitcoin on the corporate balance sheet isn’t going to take off anytime soon. Not because of regulation, but more so because Thai companies are conservative and don’t quite understand it yet. 

The action, Bulakul says, is on the retail and infrastructure side. There’s plenty of institutional interest in blockchain and DeFi infrastructure — Siam Commercial Bank, one if Thailand’s biggest, is a prolific investor in DeFi via its SCB 10x arm — and weekly reports from the Thai SEC puts the number of crypto users in-country at around 800,000. Thai’s are intense market speculators, after all, and the confidence in the nation’s currency, the Baht, is faltering as it slips due to closed borders and a non-existent tourist industry (a pillar of the economy). Mixed together, it’s a perfect concoction for apeing into crypto. 

With an eye towards the future, one of the things Bulakul is looking for in Thailand is the emergence of more digital asset investment opportunities. In 2019, Thailand, along with Taiwan, ratified laws for Security Token Offerings. But in the time since then nothing has really happened, with some calling it a “land of frowns”. But Bulakul is optimistic, citing filings for up-and-coming STOs for REIT-like real estate funds. 

While there might not be a Thai version of MicroStrategy anytime soon, it’s very possible that the market in the country could simply skip this step as digital assets and DeFi flourish in the “land of smiles.”

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