2 days ago
Crypto seen benefiting from tax exemption
Thailand's recent move to exempt capital gains tax on cryptocurrency for a five-year period could draw a massive pool of Thai capital estimated at more than US$60 billion currently held offshore back to the country, says Merkle Capital.
According to Merkle, Thailand's first digital asset fund manager, much of this capital is spent on digital assets via unregulated international platforms.
The capital gains tax exemption is poised to reshape the investment landscape, said Mana Khanijou, chief commercial officer of Merkle Capital.
The decision marks a significant step towards strengthening the country's position as a regional digital asset hub, he said.
Effective as of Jan 1, 2025 through Dec 31, 2029, this policy applies to transactions conducted through licensed exchanges, brokers and dealers within Thailand.
"This bold fiscal incentive not only encourages greater transparency in digital asset trading, especially during peak market conditions, but also lays the groundwork to repatriate a portion of the vast offshore funds held by Thai investors," said Mr Mana.
Historically, the lack of a domestic tax advantage and limited regulatory clarity have driven investors toward unlicensed international platforms, placing their capital outside of Thailand's financial oversight, he noted.
But with liquidity tightening at home and the government eager to boost capital inflows, the tax exemption serves as a timely magnet for wealth to return to the domestic economy.
"If successful, it could directly support broader economic goals, particularly as the digital economy is expected to account for over one-third of Thai GDP by 2030."
However, to fully realise its digital potential, Mr Mana said Thailand must push forward on multiple fronts by advancing smart infrastructure, embracing lifestyle digitalisation, modernising regulatory frameworks, and continuing to offer attractive fiscal policies such as crypto tax relief.
"Competition is heating up, with neighbouring countries pursuing similar strategies. For Thailand to lead, momentum must be sustained, and innovation must remain central to national policy. With the right commitment, Thailand could emerge not only as a regulatory leader but as Southeast Asia's premier digital trading hub," he said.
In a related development, InnovestX Securities forecasts that Bitcoin and Ethereum prices will remain highly volatile throughout this month, driven primarily by macroeconomic and geopolitical developments.
A key date to watch is Aug 1 -- the US tariff deadline.
"If the outcome signals a more dovish or market-friendly approach, it could provide a lift to crypto prices," said the brokerage.
Investors should also monitor the US consumer price index (CPI), a crucial data point used by the Federal Reserve in its monetary policy decisions. If the CPI reading comes in lower than market expectations, it could create positive sentiment for cryptocurrencies, as it may increase the likelihood of a rate cut later this year.
For the Fed's meeting at the end of July, InnovestX maintains that the regulator is likely to keep interest rates unchanged.
"If this holds true, the impact on crypto prices is expected to be relatively limited," noted the brokerage.
"One of the biggest uncertainties remains the escalating conflict between Israel and Iran. Should tensions worsen, there is a chance that investors may reduce their exposure to cryptocurrencies in a risk-off move, despite recent signs of improving sentiment on the geopolitical front. The progress of trade negotiations also remains an important factor to monitor."
