Thailand’s Siam Commercial Bank Investing in DeFi to Prepare for an Era of Disintermediation

Asia’s large incumbent banks have historically had a mixed record on digital assets and DeFi. Hong Kong’s HSBC seems terrified of it and DBS is making small regulated steps, but Thailand’s Siam Commercial Bank (SCB)’s venture fund, SCB 10x, has taken a full embrace of the future of finance, doubling down on investments in the sector. 

All this is to prepare for an era where banks and other financial institutions are possibly “completely disintermediated,” said SCB 10x’s Chief Venture and Innovation Officer Mukaya Tai. 

“The best way to do that is to invest in DeFi very actively to learn and prepare the bank, find DeFi partners, integrate DeFi into traditional finance, become a player in this area, and potentially be the disruptor in this area,” Tai told Blockworks in an interview. “My view is that in the future, there will be an integration of traditional finance with DeFi.”

SCB 10x, SCB’s venture arm, invests in projects that parallel traditional finance, such as lending protocol Alpha and fixed income protocol Anchor. The fixed income market, Tai said, has a global value of $128 trillion creating an incredibly lucrative sector for innovation. Additionally, SCB 10x is working with Band Protocol, which develops oracles to validate real-world data such as prices for use in smart contracts, as a node validator, meaning it’s an active participant in the network.

“I am particularly proud of this because this deal marks the first time in Asia that a leading traditional bank such as ours has engaged in real involvement in the public DeFi network. Being a node validator means having certain technical skills and capabilities which we possess in-house,” Tai said. “This kind of active, hands-on engagement with the DeFi protocols and their network I believe is unique to SCB/SCB 10x among others in traditional finance, and this is something we look forward to doing with our future DeFi investments as well.”

There’s an appetite for DeFi, outside of Hong Kong and Singapore

Tai points to a healthy appetite for DeFi in Thailand, as demonstrated by the volume of visits to MetaMask, a popular browser-based software wallet used with Ethereum and other blockchains. 

The number of visits to MetaMask from Thailand hit the 4.7 million mark in April 2021, according to publicly available data, with Thailand accounting for 3% of all traffic. That might not seem like much, but that puts Thailand in the top four countries behind the US, China, and Turkey. 

Tai notes that Thai users were #1 in trading traffic on Pancake Swap, a DEX based on the Binance Service Chain, and synthetic stock trading platform Mirror. 

While Tai would not comment on SCB 10x’s conversations with regulators, the Thai Securities and Exchange Commission has seemingly been open to forms of crypto trading, provided it stays within certain boundaries. In early June, the regulator banned Thai-registered exchanges from listing meme tokens like DOGE that have “no clear objectives or substance, and whose prices are dictated by social media trends” as well as NFTs (which market data suggests fall in the same category). 

Bangkok-based law firm Pugnatorius called the legal framework surrounding NFTs “unresolved” and pointed out that in the eyes of the law, NFT’s aren’t digital certificates of ownership but rather a “certificate of sponsorship”. This view of NFTs, which would see them popped up without much underlying substance, could be the reason why the Thai SEC has given them a red light. 

Earlier, Pugnatorius had said Thailand was suffering from a ‘crypto cold season’ as the nation’s much-publicized regulated Security Token Offering platforms (a regulated way to raise capital via blockchain-enabled equity sales) hadn’t drawn much interest from investors.

“Potential and creativity are channeled into DeFi ventures,” Pugnatorius said at the time. 

And what’s likely driving this appetite? Well, unlike blockchain technology ventures — which look to incorporate blockchain into different facets of the economy — that tried to raise money via STOs to not much avail, DeFi has captured the imagination and interest of the market with their quick double-digit returns. 

Though Thailand isn’t a financial hub like Singapore and Hong Kong it does have one thing in common confirms Tai: a lack of taxes on DeFi.