The Emergency decree on digital asset businesses came into force in May 2018 (read here). The law regulates activities related to cryptocurrencies and tokens, defines requirements for exchanges, brokers, and dealers who must work in the country based on licenses appointing a controlling state body – the Securities and Exchange Commission (SEC).
Crypto exchanges are licensed by the state, which guarantees the legality and transparency of transactions with digital assets.
Currently, the turnover of SEC-licensed crypto exchanges is about $3 billion (100 billion baht) per month. But this amount is going to increase significantly because SCB and Kasikornbank (the country’s largest banks) join the game and place big bets on cryptocurrency.
Here's an example. In November 2021, Siam Commercial Bank (Thailand's oldest bank - 114 years on the market) bought 51% of the largest Thai crypto exchange Bitkub shares. The transaction value was 17.8 billion Thai baht.
How did the market react to this event? The price of SCB shares increased by almost 10% in one week. The capitalization grew by more than $900 million (30 billion baht), and it is almost twice the Bitkub exchange transaction for the purchase.
Most likely, SCB bank customers will soon have the opportunity of opening another account along with the existing one in Thai baht or US dollars, for example, in USDT/USDC*. We already have Phuket companies that have registered a corporate bank account on the cryptocurrency exchange platform and provided their crypto services.
But the plot thickens. Asset tokenization** is fully approved by the SEC. The regulator issues licenses to companies using the Ethereum blockchain for digitization, listing, and trading of tangible assets, including real estate.
"Crypto is the future, so we must make Thailand a crypto-positive society," - these are the words of the head of the Tourism Authority of Thailand (TAT). At the moment, TAT is cooperating with the SEC and the local crypto exchange, preparing the ground for the adoption of digital tokens as means of payment for tourists.
You can already use cryptocurrency in Phuket, for example, to buy or rent a yacht. Our partners have a corporate crypto account, accept payments in USDT and USDC. Of course, you can purchase real estate with bitcoins, ethers, and other currencies. We have already had successful deals. Now, more about one of them.
The client chose the Shambhala Grand Villa complex. A few words about the project to understand the motivation behind this purchase. Firstly, the walking accessibility of the beach in a premium location. The Laguna Area has a developed infrastructure: golf courses, spa centers, restaurants, five-star hotels, a wide sandy beach line with a length of more than seven kilometers. The Boat Avenue Park & Playground construction nearby will be finished soon. Perfect for walking and entertainment.
These factors guarantee high capitalization and market demand (only 4 out of 43 villas are still on sale).
Secondly, a management company supports the rental business organization. The villas are fully-furnished, and the management company takes full responsibility for the equipment condition and repairs, organizes daily rent, helps with marketing, provides a high service level, a decent price tag, and stable occupancy.
The management company offers the investor several rental programs: either a fixed guaranteed annual income or dividing the actual profit with the management company in a percentage ratio of 60/40 in the investor’s favor. Owners pay in Thai baht, one of the most stable currencies in the world. This transaction has become a good diversification of our client's crypto assets.
The cost of a fully furnished villa was 22.6 million baht ($675,000). The price is fixed in Thai baht. If you want to use other currencies, you have to consider the exchange rate at the purchase time. Our agreement with the developer is on payments in Ethereum, although it accepts other types of cryptocurrencies.
You need to make a reservation payment to book a villa, which is possible via a QR code. The maximum amount of payment, in this case, is 1 million Thai baht.
The process is simple: the developer enters the account on the Bitazza exchange platform, through which they work, click "deposit", and the application generates a QR code, and then the buyer receives it and makes a payment. The same works with the reservation of a villa.
Our investor transferred ethers via the QR code to the developer's wallet, where they appeared in a couple of minutes. The developer immediately (through the exchange platform) converted the crypto into Thai baht and credited them to a regular account, providing the buyer with a receipt for crediting the payment in baht.
That's it! The whole transaction took a couple of minutes. While the payment through the bank can take up to seven business days. Moreover, the developer managed all the transfer costs, since the company paid a currency conversion commission.
This transaction ended the same way as any other involving a foreigner would. We signed a purchase and sale agreement, and the client transferred the remaining amount in a single payment in Ethereum.
There is one legal nuance. The real estate we have sold to date was in leasehold.
Freehold is a little more complicated. Investments must be received from a foreign individual in foreign currency from abroad with a specific purpose of payment. The Land Department requires a special foreign exchange transaction form (FET Form) for each transaction. Only a bank can provide a FET Form, the crypto exchange platform does not provide such an opportunity yet.
However, that is not a big deal. You need to convert cash into local currency in a Thai bank. The bank will also issue a FET Form for this operation, which will also be the basis in the Land Department for registering real estate in freehold.
It is possible to transfer crypto-assets into dollars or euros, exchange them to Thai currency in a bank, get a FET Form and register the real estate in freehold. Yes, there will be losses on double conversion, but this will fulfill the legal requirement. If one of the investors insists on freehold ownership, then that is the way.
I am a crypto enthusiast. I believe that this sphere will develop rapidly. For example, the developer of the Shambhala complex developer is going to IPO. Other developers will probably start tokenizing real estate and accept crypto payments without any conversions very soon.
Another example. There is a fascinating investment project in Phuket called Patong Bay Ocean View.
The developer offers cottages with one bedroom and a kitchen-living room with a total area of 60-70 sq. m, with a Jacuzzi bath or a mini-pool. Guaranteed income is fixed at 7% per annum for 15 years. After 100% payment, the first 7% is transferred to the investor after 30 days, the payment takes place a year in advance.
In addition, it also offers the option of reverse guaranteed repurchase: the developer is ready to buy the purchased cottage from you back for 100% of the investment amount in 10-15 years. Also, you get an opportunity to relax in this cottage for 2-4 weeks a year. So, this developer is already accepting absolutely all types of cryptocurrencies without any commission.
The field is new, not many developers in Phuket have faced it yet. So far, the general mass of real estate agents does not understand anything about crypto. But if you don't see advertising banners "We sell for crypto" here and there, that does not mean it is impossible to do.
I was the initiator in those transactions we conducted. I had a request from a client and searched the ways to solve it. It didn't take long to persuade developers: the companies are on-trend. But if you suddenly come across some timid developer who does not know how it works, you need to explain everything ad nauseam. Taking into account all the advantages, I am sure such a developer will not refuse the deal. Thus, theoretically, any object in Phuket can be bought for cryptocurrency, whether it is an elite villa or a small apartment.
No one knows what is going to next with the world of cryptocurrencies. But since many countries have already accepted them as means of payment, the prospects are bright. The probability that blockchain technology will go into oblivion is almost zero. Nevertheless, there is a lot of easy money in this area, which would be hurtful to invest in a tangible sector. For example, to invest in liquid real estate, the value of which is reliable.
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