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Thailand speeds up blockchain adoption despite bitcoin plunge

Country's cryptocurrency exchange plans to raise $10m in security token offering

Bitcoin, the most common cryptocurrency circulated around the world, tumbled 44.6% to $3,474 on Nov. 25, from $6,270 on Nov. 14.   © Getty Images

BANGKOK -- Thai cryptocurrency exchange pioneer Satang Corp. is defying the recent meltdown in virtual currencies with plans raise $9.9 million in a security token offering early next year, as the government accelerates adoption of the blockchain technology behind virtual currencies.

Satang's plan has the backing of the Thai government, which wants to make Thailand a center for blockchain.

"We are aiming for the first quarter of 2019 to do the security token offering," Satang CEO Poramin Insom said.

Security tokens are a new method of fundraising for cryptocurrency companies which offer investors a share in profits from certain assets through a dividend. The value of the tokens fluctuates according to the performance of the company.

The tokens are designed to avoid the regulatory problems that were encountered by the industry's previous fund-raising method - initial coin offerings, or ICOs, which often did not comply with U.S. securities laws. However Beijing this weekend announced that security token offerings remained illegal in China as they had not yet been authorised.

Satang intends to use the proceeds of the security token offering to develop Satang App, an e-wallet that allows consumers to make payments. It also plans to set up Satang Shops at tourist hot spots like Phuket and Pattaya.

Satang's announcement comes at a time of turbulence in the cryptocurrency markets. The price of bitcoin, the most common cryptocurrency circulated around the world, tumbled 44.6% to $3,474 on Nov. 25, the lowest level since September 2017, from $6,270 on Nov. 14, just before the recent series of drops started.

But Satang's plan has the support of the Thai government, which wants to incorporate the technology into its systems and establish a regulatory framework for blockchain and cryptocurrencies.

The Thai revenue department revealed early November plans to track tax evasion using blockchain technology. Blockchain will help to verify tax amounts, speed up the refund process and add transparency and security, said the department Director-General Ekniti Nitithanprapas. He previously said that applying new and emerging technologies such as blockchain and big data in the tax collection system are his priorities.

"The government will run the upcoming national digital ID platform on blockchain," said Kirida Bhaopichitr, director for Thailand Developmet Research Institute Economic Intelligence Service, referring to the government infrastructure intended to provide a flexible and highly secured method of self-identification for any Thai citizen. "It would allow the government to trace transactions, and would also reduce paperworks for ordinary people."

In June, Thailand legalized seven cryptocurrencies: bitcoin, ethereum, bitcoin cash, ethereum classic, litecoin, ripple and stellar. It also allowed a limited number of cryptocurrency exchanges and broker-dealers to apply for operating licenses.

In August, the Bank of Thailand said it would create a digital currency to be used for transferring money among commercial banks and the central bank. It said it would work with eight commercial banks to build a prototype.

On Nov. 23, the Thai SEC sent a warning to 14 unauthorized cryptocurrency exchange operators, in a sign that its regulatory system is working and flagging up malpractices.

Apart from Satang's STO, the second largest cryptocurrency exchange in South Korea, bithumb, said in July it would open an exchange in Thailand, thanks to the clear-cut regulatory framework there.

Satang CEO Poramin was behind another blockchain milestone in the country earlier this month. He applied the technology for the first time in the world in an election -- Thailand's Democrat Party used it to conduct a primary election to select a leader.

The nationwide electronic voting process involving 120,000 voters took nine days instead of the originally planned five due to a technical glitch, but it successfully avoided classic errors such as multiple counts of a single vote and result manipulation.

But it is not thought that blockchain would be employed in the general election that could be held as early as Feb. 24 next year.

Yet Poramin is ambitious. "I hope that other political parties or even the government not just in Thailand but in the region can look to using blockchain technology in enabling large scale e-voting or polling," he said.

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