SCB X, the parent company of Siam Commercial Bank, Thailand's oldest lender, told Nikkei Asia that it has indefinitely delayed a 17.85-billion-baht ($487 million) bid to acquire a 51% stake in Bitkub, the kingdom's largest local cryptocurrency exchange platform, as regulation continues to inhibit growth of crypto trading.
"We have made it clear in our statement to the Stock Exchange of Thailand that the deal is still undergoing due diligence," said a senior official at the SCB X, who asked not to be named. "We don't know when the deal will be sealed."
The decision to postpone came to light earlier this month when SCB X submitted a letter to the SET explaining the current situation.
"Presently, the matter is in the process of due diligence and discussion with the regulatory bodies," SCB X Chief Executive Arthid Nanthawithaya said in the statement. "Therefore, the completion period of the transaction is now extended."
The financial group first expressed its intention to acquire a stake in Bitkub through SCB Securities, its brokerage subsidiary, in November as part of a strategy to become a regional fintech.
The deal was expected to be completed by the first quarter of 2022, and Bitkub was valued at 35 billion baht ($1.05 billion), making it a unicorn in a country once considered barren in terms of startups. (A unicorn is a private company valued at over $1 billion.)
In February, the Bank of Thailand and the Securities and Exchange Commission (SEC) announced tougher regulation of cryptocurrencies and limits on their use for payments to ensure they can only be traded as assets on licensed platforms.
This happened just as global Bitcoin prices tanked, and further dampened crypto trading sentiment as investors took losses. Hopes of Bitkub expanding its customer base dimmed.
"Let me put it this way, I think the tight regulations are quite unfriendly to crypto trade and limit the growth of crypto trading to less than we expected," Nares Laopannarai, secretary general of the Thai Digital Asset Association, told Nikkei.
On July 2, the SEC imposed civil sanctions on Sakolkorn Sakavee, chairman of Bitkub Capital Group Holdings, for fabricating information regarding the trading volume of digital assets on the exchange.
Sakolkorn was fined 8 million baht ($218,000) and banned from executive positions in the company for 12 months.
He founded the company with Topp Jirayut Srupsrisopa, the chief executive of Bitkub Capital Group Holdings and face of the company.
Given the increasingly stringent regulation at home, Bitkub has attempted to move to Vietnam, where there is a crypto savvy younger generation and a more crypto friendly atmosphere, according to Sakolkorn.
In April, Bitkub joined with a local Vietnamese tech startup to launch Kubtech as a private blockchain operator that aims to morph into a cryptocurrency and digital asset trading platform in the near future.
"We have launched some products on our blockchain platform that do not need to have a regulator's license for trading, such as games," said Sakolkorn. "We will wait for the 5G infrastructure and regulators there to be ready, then we can transform ourselves into a crypto platform."
Although Vietnam's central bank also banned crypto currencies as a means of payment in 2017, investing in Bitcoin and other crypto currencies by Vietnamese internet users has been reported for a decade.
Hundreds of crypto trading groups and communities exist in Vietnam on social media with thousands of members from all walks of life. Some businesses have also been accepting Bitcoin for years.
In June, the National Assembly decided to develop a proper legal framework for cryptocurrencies and virtual assets. With legislation absent, g, there have been instances of criminal activity, including hacks and cyber scams.
In 2018, some 32,000 Vietnamese investors in an initial coin offering by Modern Tech in Ho Chi Minh City were reported to have lost $660 million when the company's founders absconded.