The imminent introduction of a 7% value added tax (VAT) in addition to a 15% tax on capital gains for all crypto-currency trades in Thailand is sending a shock wave through the trading community, according to a local industry insider.
“From my personal point of view, it just doesn’t make that much sense. Regulators don’t understand crypto-currency. The whole point is to remove the intermediaries and the middle men,” says Topp Jirayut Srupsrisopa, the former CEO of leading Thai Bitcoin exchange, coins.co.th.
Topp believes the new regulations will make crypto-currency prohibitively expensive. “It is no longer a viable transactional protocol for the people. People will move back to banks because it is much cheaper instead of using crypto-currency,” he says, likening the situation to the UK in the 19th century, which had stringent laws restricting the use of automobiles, allowing the monopolistic system of horses and carriages to survive. When the Locomotives on Highways Act 1896 came out, explains Topp, the cartel was smashed.
“This happens again and again in technology and … what we face with crypto-currency in Thailand today is the same, there is too much regulation and scare mongering. Old systems are governing new technology, and regulations are increasing the cost of operating. It follows old patterns and it’s hard to change,” Topp adds.
For Topp, the possibility of change can happen in Thailand, in spite of the regulatory environment. “Resistance will have to come from users, and while we have a Thai Blockchain Association trying to educate the government, regulators come from different departments. The Securities and Exchange Commission of Thailand does support technology, but it has little power to govern the tax regulations, even though it is helping to legitimize the space,” he says.
At the moment, Topp foresees a movement of the industry either overseas or below the surface. “Investors and miners would rather go to Singapore and Hong Kong and leave investment funds there or cash out. Peer to peer crypto-currency payments will also get bigger, and we may see more exchange of goods and services through digital currency as people avoid the capital gains tax altogether. Things may even go more underground,“ he adds.
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