Tax policies, interest rates align for domestic market

Bangkok Post

19 hours ago

Thailand's digital asset market is poised to keep growing as favourable domestic tax policies align with expected cuts in global interest rates, while institutional adoption gains globally.
Analysts welcomed the government's recent move to exempt the capital gains tax on digital asset trading, saying it could help position Thailand as a Southeast Asian digital asset hub, especially as macroeconomic and geopolitical uncertainties evolve in the second half of 2025.
Woramet Chansen, investment adviser at Merkle Capital, said the US Federal Reserve kept interest rates steady during the first half of the year amid global geopolitical tensions and economic ambiguity.
"The Fed's cautious stance signals a balancing act between inflation control and sustainable growth," he said, adding that digital asset investors should monitor whether the global environment is leaning towards a risk-on or risk-off mode.
A potential blockade of the Strait of Hormuz, a critical chokepoint for global oil shipments, could trigger a spike in oil prices. That would likely accelerate inflation and force the Fed to delay any interest rate cuts.
Meanwhile, US economic data indicates weakening momentum and inflation came in lower than expected, while jobless claims rose, fuelling speculation the Fed may begin cutting rates in September or December.
Still, the Fed's latest dot plot projections suggest only modest rate reductions through 2027, reflecting the limited scope of monetary tools available. Should the economy deteriorate further, additional quantitative easing may be required.
On the trade front, tensions between the US and China appear to be easing. The 90-day suspension of US tariffs opened the door to further negotiations. This easing of trade friction is seen as a positive signal for global markets, including crypto.
However, July and August will be key months to watch, as the grace period for negotiations comes to an end, according to Merkle.
"The global environment for digital assets continues to improve. Leading financial institutions such as JPMorgan are developing their own stablecoins, while the recent passage of the Genius Act in the US provides a legal framework for stablecoins, further legitimising their use in mainstream finance," said Mr Woramet.
In addition, investment giants such as BlackRock and MicroStrategy have continued to accumulate Bitcoin, even in the absence of Fed rate cuts.
"Combined with record-high global money supply, these developments are setting the stage for another new high for Bitcoin in the near future," he said.
Mr Woramet said Thailand's tax exemption policy for crypto trading is a powerful signal of the government's intent to develop a globally competitive digital asset ecosystem. The move could not only attract foreign capital, but also enhance the competitiveness of Thai private firms on the global stage.
"If additional legal frameworks are introduced such as allowing hedging instruments and crypto derivatives, it could dramatically lift the market's growth potential, emphasising the importance of consistent policy direction regardless of political transitions," he said.
G-Tokens backed by government bonds signal greater institutional involvement and regulatory support. These developments enhance market confidence and may pave the way for broader adoption, said Mr Woramet.
Investors are advised to exercise caution in this highly volatile asset class. Comprehensive research, disciplined strategies and a deep understanding of individual risk tolerance are essential, noted Merkle.