The digital sphere was shaken on the morning of Sept 2, with Thailand’s largest digital asset exchange deciding to exit the business.
The announcement by Bitcoin Co (bx.in.th) left many cryptocurrency enthusiasts dazed and confused, leading to questions and speculation over the real reason behind the company’s decision to shut down operations.
Bitcoin Co said in its online statement it will cease operations at the end of this month “to focus on other business opportunities”, igniting a price slump for digital assets traded on the exchange.
The price of bitcoin traded on bx.in.th fell below 200,000 baht per bitcoin at one point, touching a low of 199,999 baht.
Prices of other cryptocurrencies and digital tokens also plummeted across the board during the day, ranging from 2-60%.
Bitcoin’s announcement to terminate operations prompted panic selling of digital assets.
“The company will not seek to hold a Securities and Exchange Commission [SEC] licence for digital asset exchanges for 2020, and we ask all customers to withdraw their funds before Nov 1, 2019,” Bitcoin Co said on its website.
“After Nov 1, 2019, the company will operate the bx.in.th website only as a method for customers to contact the company about outstanding issues.”
All deposits will be disabled after Sept 6, 2019.
The truth behind the startling termination may not surface soon as no one from the company has come forward to elaborate on the decision.
Repeated attempts to contact founder and chief executive David Barnes by the Bangkok Post have been unsuccessful.
While the hunt for testimonials from Bitcoin continues, external sources operating in the same digital sector have provided clues about plausible reasons for the shutdown.
Launched in 2013, Bitcoin Co initially offered people in Thailand access to buying and selling bitcoin.
The company launched bx.in.th a year later as a “flagship product” amid increasing interest in virtual currencies.
Simply put, Bitcoin Co was a pioneer of cryptocurrency trading in Thailand, starting from small-scale trading and reaching a zenith when the bitcoin price peaked in 2017.
The company handled 1.5 billion baht worth of bitcoin transactions two years ago, according to Mr Barnes.
Under the royal decree on digital assets that has been effective since May, 2018, Bitcoin Co was one of the first three companies to be approved as authorised digital asset exchanges in Thailand by the Finance Ministry.
Exchanges, brokers and dealers are required to apply for licences from the ministry, while initial coin offering portals must be approved by the SEC.
Stringent regulations and imminent market saturation could be the main factors prompting the forthcoming closure of Bitcoin Co.
“BX [Bitcoin Co] may be worried about providing customer information and trading information to the SEC on a daily basis,” said Poramin Insom, founder of Satang Corporation Co.
Bitcoin Co may not want to submit to such stringent regulation and additional regulations for digital asset exchanges may be crafted in the future, said Mr Poramin.
Higher competition in the domestic digital asset industry may have encouraged the company’s exit.
Bitcoin Co may feel the industry’s peak has passed and market saturation is anticipated, he said.
Jirayut Srupsrisopa, co-founder and chief executive of Bitkub Capital Group Holdings, said Bitcoin Co’s closure announcement seems to be based on commercial operations as the company may see a decline in future profit with higher competition and imminent market saturation.
The country’s largest digital asset exchange may also see higher growth opportunities overseas, said Mr Jirayut.
For Wichit Saiklao, a local craft beer brewer in Greater Bangkok whose bar accepts payment in bitcoins and houses the country’s only bitcoin ATM, Bitcoin Co’s impending closure is not expected to have a significant impact as he is not a digital asset trader.
“I see bitcoin as ‘digital gold’. The reason I have accepted payment of goods and services in bitcoin for 6-7 years is because I believe in the philosophy of decentralisation,” said Mr Wichit.
“New technology facilitating digital payments is on the rise and the opening or closure of a digital asset exchange is not that exciting. Personally, I think the decision may stem from how the timing is not optimal for this kind of business.”
The global cryptocurrency trade has been lacklustre for the most part after the 2017 bitcoin gold rush, hindering business expansion plans and product launches by companies involved in the digital asset industry.
Bitcoin Co’s closure comes as a huge surprise, especially for a company positioned at the top of Thailand’s digital asset industry that gave no indication of an exit.
“Time will tell about the closure, the next business scheme [from Mr Barnes] and whether BX customers can transfer their digital asset holdings,” said Prinya Hom-anek, president and chief executive at the ACIS Professional Centre.
Mr Prinya advocates a revision of the digital asset royal decree for clearer rules and critical audits to protect retail investors.
“We need market surveillance like the stock exchange has. There will definitely be future revisions [of the digital asset royal decree]. This is a case study, watched closely by global actors, for the SEC’s next move,” he said.
Digital asset exchanges should comply with certain information disclosures to the SEC, but they also have a responsibility to protect customer privacy, said Mr Prinya.
While regulators are focused on the electronic know-your-customer process, some may forget about the infrastructure of the blockchain technology itself.
“Although blockchain is difficult to hack, operations of digital asset exchanges also have other databases off the chain, such as customer information, money storage and transaction information. These are stored in a non-blockchain database,” said Mr Prinya.
While regulations could be seen as a point of contention between the market regulator and operators of digital asset exchanges, companies seem upbeat about the future as physical assets are likely to be digitised soon.
“Many assets will be digitised in 3-4 years, but the extent to which depends on the regulator’s ability to accept these changes,” said Mr Poramin.
Mr Jirayut voiced a similar belief, saying “mass adoption of digital assets is imminent. The turning point is Libra [a blockchain-based digital currency developed by Facebook and the Libra Association] and the digital yuan [developed by the People’s Bank of China].”