The Thai Digital Assets Exchange (TDX), a digital token exchange under the aegis of the Stock Exchange of Thailand (SET), is pioneering the business and expects more new tokens this year after the regulator initiated a clear policy to support them.
Digital tokens are a new product not widely known among investors, but they offer an interesting investment alternative, said TDX managing director Pongpiti Ektheinchai.
TDX has only one digital token listed on the exchange, RealX, an investment token issued by Real Estate Exponential Co Ltd that started trading on Sept 25, 2023.
Digital assets have more complicated investment conditions than cryptocurrencies, he said.
The SET views investment tokens as useful in helping the business sector raise funds for expansion, meaning they can support economic growth in the long term, said Mr Pongpiti.
Many companies submitted initial coin offerings (ICOs) to the Securities and Exchange Commission (SEC) last year.
However, most of them were rejected or are still under consideration as the SEC amends fundraising laws to clearly separate investment tokens under the Digital Asset Decree and securities fundraising under the SEC Act.
The SEC and the SET are concerned about investor protection given the limited knowledge and understanding among investors. They want to ensure each token is worthy of investment and the ICO price is fairly set, he said.
"Digital tokens traded on the TDX have to be screened through the ICO Portal, which acts like an initial public offering financial advisor," said Mr Pongpiti.
Destiny Token, issued by Special Destiny Co Ltd last year for the production of the movie Love Destiny 2, marked the first such project in Thailand, offering 16,087 tokens worth more than 265 million baht for sale through Kubix Digital Asset, an ICO portal.
According to Thailand Box Office, Love Destiny 2 raked in 393 million baht nationwide. Special Destiny then exercised its right to redeem the digital tokens early and offered an interest rate to token holders of 2.99% per year on March 1, 2023.
Love Destiny is a good model for how fundraising via digital tokens can work because in addition to a positive return, investors received other privileges such as free movie tickets and a chance to meet and dine with the actors, he said.
"There are some interesting projects in progress, such as a reforestation project to sell carbon credits. The issuer raises funds to grow a forest and later they can sell carbon credits and generate returns for token holders," Mr Pongpiti said.
According to Kubix, the global tokenised asset market will account for 10% of global GDP or up to US$16.1 trillion in 2030 as a number of leading companies and investment institutions have invested in tokenised assets in many industries.
"The Thai stock market often receives complaints that products are not diverse or sexy enough. Having a variety of products helps increase interest. The SET is filling those gaps with products such as depositary receipts, investment tokens and other new products to offer investors more choices," he said.
Regulations for investment tokens should be amended to make it easier to invest in smaller units, said Mr Pongpiti, helping to draw in younger investors.
Some investment tokens still require a minimum investment of 1-2 million baht.
"TDX has been permitted to trade for five years, but we still encounter many legal issues that need to be resolved to drive market growth," he said.
Digital token exchanges in most markets around the world are still in the early stages and not very active, said Mr Pongpiti.
"We will probably have to wait until many tokens are listed and considered developed products for our market to attract investors," he said.