The genie is out of the bottle: digital assets will thrive in the digital age

They were speaking at a virtual forum "Digital Assets: The New Paradigm Shift of the Financial World" organised via Zoom by The Nation and Asia News Network on Wednesday.

Digital Assets are increasingly gaining in popularity and growing at a tremendous pace. Millennials are showing a preference for digital assets over the traditional financial markets.

According to a report by Verified Market Research, the global digital asset management market size is projected to reach nearly US$14 billion by 2028.

Despite the increasing global interest, digital assets face high risks, such as volatile investments, unstable prices, safety issues and international conflicts.

Financial innovation

Speaking at the event, the president of the Stock Exchange of Thailand (SET), Dr Pakorn Peetathawatchai, said the exchange wanted the traditional and digital asset markets to coexist. The SET is launching the Thailand Digital Exchange (TDX), an open platform to link traditional and digital asset markets, in the third quarter of this year.

He said the digital asset market is growing and becoming a part of the global market even though the market capitalisation of the digital asset market, as of March 11, was only $1.79 trillion compared to $123 trillion in the stock market.

He explained that there are currently three main digital assets:

Investment token, which gives the holder the right to invest in any project or underlying asset.

Utility token, which gives the holder the right to acquire goods, services and any other specific right.

Cryptocurrency, which is a digital virtual currency secured by cryptography.

He believes that traditional and digital asset markets can coexist even though there are many differences between the two markets, such as market types, regulations, investor base and involved businesses.

"When compared piece by piece, there are a lot of similarities, but the players will be different," he said. As an example, he said that fundraisers in the capital market usually seek advice from brokerage firms, while those in the digital assets market seek advice from token issuers.

He expected business and investment opportunities in both traditional and digital asset markets to be more open to all people in the coming years.

Pakorn revealed that TDX will focus on investment and utility tokens, adding that it will serve as an application programming interface platform and portal for collaborators.

"Investors will be able to use the platform to access investment either locally, globally, traditionally or digitally,” he added. “We will not touch cryptocurrency,” he said. 

Digital assets and financial mainstream

Digital assets are growing fast in many countries worldwide, especially among Generation Z and millennials, said Zipmex CEO and co-founder Marcus Lim, PDAX founder and CEO Nichel Gaba, and Fusang CEO Henry Chong.

Henry said the security token market globally is moving at an incredible speed, adding that banks or countries are looking to use tokenisation technology to represent traditional assets, such as shares, bonds and funds.

He estimated that a quarter of all publicly listed securities around the world would be tokenised by 2030.

“We can really live with a vision of all assets being digitised,” he said.

Marcus said Zipmex digital asset platform has grown fast in the Asia Pacific in March this year with more than 1.9 million registered users, a total cumulative trading volume of more than $7 billion and a presence in four countries, namely Thailand, Indonesia, Singapore and Australia.

Nichel said the growth of cryptocurrency in the Phillippines is around $3 million and $3.5 million, thanks to a strong cryptocurrency-friendly and savvy base.

"Having been in the market throughout my career, I know how fast the weather can change. New investors should focus on developing real skills," he said.

"The genie is out of the bottle. It is a magic that is evolving very quickly," he said.

Safe and sensible regulation

Finding the right balance and looking at different angles are keys to regulating digital assets, Bitkub Capital Group Holdings founder and Group CEO Jirayut Srupsrisopa said.

He said at the same time regulations have to adapt quickly, too, because of the speed of innovation.

“Too much regulation would strangle innovation and it could move elsewhere, but too little regulation also raises risks of scams,” he said.

He emphasised that it was important for regulated players and regulators to work together to find the right balance and make sure that trade activities are on the ground, otherwise it will be harder to control.

"We should bridge the communication gap and the mindset to benefit the country, allow the technology to foster and protect investors," he said,

"Meanwhile, we have to make sure that illicit activities are not happening on the platform, especially overseas."

He added that a strong digital infrastructure is necessary as cryptocurrencies and blockchain would be the new key to growth of Thailand's economy in the future. He said Thailand had missed the Web 1.0 and 2.0 bus, and it could not afford to miss 3.0.

He said Thailand’s growth in the past had depended on the country becoming an auto manufacturing hub and a major tourist centre. Thailand should strive to become the digital hub in the future, he said.

Blockchain Association co-chairman Chia Hock Lai said regulations should look at risks, but it should not ruin innovation.

He explained that in Singapore, cryptocurrency trading as of now accounts for less than 2 per cent of overall trading.

He said there was a case to be made for the industry regulating itself. “Let them come up with their own code of practice. That might be a better way to manage risks and eventually achieve consumer protection," he said.

Former finance minister and Thai Fintech Association chairman Korn Chatikavanij expressed concern with the overzealous regulation in Thailand, as a result people trade digital assets elsewhere.

“Regulators should tread carefully in terms of trying to impose their will on an industry that they cannot fully control. Attempting to do so may push the industry offshore or underground,” he said.

He said it would be better to monitor the cryptocurrency growth and benefit the country for two to three years.

He added that the government should not have rushed to impose capital gains tax on cryptocurrency trading, after just a couple of years, when the equity market has not been taxed for decades.

Securities Exchange Commission Assistant Secretary-General (Legal) Thawatchai Pittayasophon said the agency is open to hearing comments from others and studying international laws, so it can adapt the regulations to the Thai context.

"Being a regulator is not easy as there are conflicting demands with many stakeholders, and it is challenging to strike the right balance," he said.

Digital assets ecosystem

Cryptomind CEO and co-founder Sanjay Popli expected a lot of security firms to explore asset tokenisation models.

"Digital currencies, securities and commodities, such as gold, silver or copper, will converge and as a whole they will hold a lot of potential," he said.

He explained that the digital asset industry was not just about speculation and investment, but also about fans, artists and gamers who can monetise their assets.

"We are going to move to the next frontier of the digital asset era, so global companies should take it seriously now," he added.
Sanjay wants global players to be allowed into Thailand, because it will help local talent too.

He believes that the crypto industry will explore new models that we cannot imagine now. He said a lot of corporates missed the bus from Web 1.0 to 2.0. They don’t want to miss 3.0. “But you can’t carry 2.0 mindset to 3.0,” he cautions

Token X CEO Jittinun Chatsiharach said digital assets can benefit anyone, as these assets are playing an important role in the digital economy.

Tokocrypto chief strategy officer Lai Chung Ying said unbanked people will benefit the most from digital assets due to the low entry barrier. These are people who previously did not have access to banks because of geographical location or other reasons.

"This group can actually get access to work on crypto financial space where minimum capital is not a requirement," he said.

Lai says there has been a 100-fold growth in Indonesia in digital assets with over 2 million accounts. He said NFT projects are taking off in Indonesia because of a lot of creativity. He predicts that the future will see hybrid use of tokens.

He said traditional companies will have to catch up with the ecosystem and for that they have to be more flexible.  He rejected some of the worries about cryptocurrencies, saying they were more transparent than traditional transactions.