Thailand’s largest digital asset exchange, Bitkub, announced on Tuesday a partnership with Bangkok-listed game publisher Asphere in an effort to reverse the local industry’s fortunes after last year’s “crypto winter.”
Asphere, the publisher of hit games, including Ragnarok Online, bought a 9.22% stake in Bitkub Online exchange from Bitkub Capital Group for THB 600 million (USD 17.5 million). Bitkub hopes to combine its blockchain infrastructure with Asphere’s content offerings and user base of 180 million people across six Southeast Asian countries.
“It’s good to prepare the infrastructure now before the country reaches an inflexion point. When content meets infrastructure, one plus one equals 10,” Bitkub founder and group CEO Topp Jirayut Srupsrisopa told Nikkei Asia in an exclusive interview.
Bitkub Online ended 2022 with a profit of THB 341.87 million (USD 9.8 million), down 86% from 2021 after its own regulatory hurdles and a failed acquisition by Siam Commercial Bank. Thai digital asset exchanges suffered a 79% drop in trading volume last year, but the liquidity crisis at No. 2 exchange Zipmex helped Bitkub grow its market share to 75.4%, with 2 million users, according to crypto data analyst CoinGecko.
Crypto’s bad year was an opportunity for Bitkub to evaluate redundancies and inefficiencies in the company, said Topp. Bitkub Capital announced it had laid off 5.5% of its staff last week.
Investing in Bitkub is also a strategic move for Asphere, which changed its name from Asiasoft in March and plans to invest THB 1.2 billion (USD 34.7 million) to expand beyond game publishing to blockchain, media and marketing, and venture capital. South Korean gaming companies have made similar investments in crypto exchanges.
Asphere’s games are popular in the four Southeast Asian countries — Vietnam, the Philippines, Indonesia and Thailand — that rank in the top 12 for crypto ownership worldwide. Asphere and Bitkub in September launched Kubplay Entertainment, a joint venture to develop platforms for blockchain-supported gaming.
The venture’s first rollout this year will be TSX, a version of an online game set in ancient China, where players can buy and hold in-app assets, and receive rewards denominated in kubcoin, Bitkub’s native cryptocurrency.
The companies expect to see revenue from the joint venture in the fourth quarter, when a formidable rival, the global crypto exchange Binance, is set to begin operating in Thailand.
“As long as there is good and fair competition, the market is big enough for everyone,” Topp said.
While crypto ownership among Thais is still less than 10%, the Thai Securities and Exchange Commission has set regulations for digital asset licenses and tokens. The regulator issued new regulations on initial coin offerings this year, with industry input.
“We need to bridge the communication gap” between regulators and crypto operators, Topp said. “The keyword is standardization — of governance and regulations, and definitions across the world, especially on scalability and security,” he added.
Bitkub will take at least two more years before an initial public offering, preferably in Bangkok. “We want to give a chance to Thailand,” Topp said.
But Hong Kong could also be an option if market conditions in the city, which has aggressively courted fintech companies, are more hospitable to crypto startups than Bangkok. Regulatory crackdowns in the US and Europe have driven fintech and crypto companies to seek refuge in Hong Kong and Dubai.
“Crypto will take off more in emerging markets in the Asia-Pacific, not in countries with higher sunk costs in legacy infrastructure,” Topp said.
The Bitkub founder added that 2024 could be a “golden year” for crypto, as central banks hit the ceiling on interest rate hikes, and the supply of new bitcoin is halved again in April. Bitcoin’s price has stabilized at USD 30,000 in the past month, rising 80% this year and 33% since the crash in the summer of 2022.
“Next year could be the last time there will be volatility in the price,” Topp predicted, a hurdle bitcoin needs to clear to prove itself a digital form of gold.
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“I don’t think the next down cycle will be bad because of the institutional money coming in. For institutional money to enter, the market needs to be fully regulated and have the security infrastructure,” he said.
Aside from gaming, central bank digital currencies could bring crypto into the mainstream, or “on-ramp.” The Bank of Thailand began a pilot program for a digital baht with selected banks late last year.
“I hope we see the actual product soon,” said Topp. “Once people on-ramp, they rarely off-ramp.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.