Sam Reynolds

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 <li>SCB announced Wednesday that it is taking a 51% stake in Thai SEC regulated exchange Bitkub. In July the bank also announced it was launching a fund to invest in DeFi projects in order to prepare for “an era of disintermediation”</li>
 <li>This continues a trend of Asia’s emerging banks investing in digital assets. Earlier this year, Korean banks began to invest in some of the country’s largest exchanges as local regulators required a partnership in place for tax compliance reasons</li>
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Thailand’s Siam Commercial Bank (SCB) announced Wednesday that it was taking a 51% stake in locally licensed crypto exchange Bitkub, pushing the exchange into Southeast Asia’s small unicorn club with a valuation just over $1 billion.&nbsp;



The terms of the deal published by SCB show the bank will take the majority stake in Bitkub for $535 million. Bitkub’s eponymous token, a rough proxy of a public listing for the exchange, shot up by 74% since the deal was announced according to <a href="https://www.coingecko.com/en/coins/bitkub-coin">CoinGecko data</a> and is now trading at $2.44.&nbsp;



“Overall the market reacted very positively to the event, SCB share price went up nearly 10% this week, increase market cap by over $900 million (30 billion THB), approximately double the deal size to buy Bitkub exchange,” Varit Bulakul, head of digital assets at Bangkok’s <a href="https://cms.blockworks.co/thailand-sec-not-a-fan-of-listed-bitcoin-macro-proxies/" target="_blank" rel="noreferrer noopener">Brooker Group</a>, told Blockworks in an email.&nbsp;



This is SCB’s second major investment in digital assets this year. In July, the bank announced the founding of its digital assets themed venture fund, SCB 10x, with a specific DeFi mandate.&nbsp;



SCB’s rival, Kasikorn Bank, is also doubling down on digital assets, opening an <a href="https://cms.blockworks.co/thailands-regulators-soften-ban-on-nfts-as-local-banks-invest-in-ecosystem/" target="_blank" rel="noreferrer noopener">NFT marketplace earlier in October.</a>&nbsp;



“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,” SCB 10x’s Chief Venture and Innovation Officer Mukaya Tai told Blockworks in an <a href="https://cms.blockworks.co/thailands-siam-commercial-bank-investing-in-defi-to-prepare-for-an-era-of-disintermediation/" target="_blank" rel="noreferrer noopener">interview at the time</a>.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“My view is that in the future, there will be an integration of traditional finance with DeFi.”</blockquote>



<h3 class="wp-block-heading">Asia’s emerging banks betting big on crypto</h3>



While Hong Kong is often <a href="https://www.ft.com/content/c6477ab5-0063-404b-8e9d-a69f7237ac06" target="_blank" rel="noreferrer noopener">associated with Asia’s premier financial center</a>, it certainly doesn’t <a href="https://cms.blockworks.co/bankman-fried-says-ftx-no-longer-calls-hong-kong-home-heres-why/" target="_blank" rel="noreferrer noopener">carry that crown</a> in the era of digital assets.&nbsp;Instead, emerging banks around Asia are picking up the slack and doubling down on crypto.&nbsp;



In Korea, there’s a <a href="https://cms.blockworks.co/morgan-stanleys-rumored-bithumb-play-shows-institutional-interest-in-koreas-digital-asset-infrastructure/" target="_blank" rel="noreferrer noopener">strong interest in digital assets infrastructure</a> by legacy financial institutions, first spurred by rules requiring banks to partner with crypto exchanges attaching a bank account to every account on an exchange. This form of Know-Your-Customer authentication is a way to combat tax evasion, and is said to have attracted interest in Bithumb from Morgan Stanley, though a deal never materialized.&nbsp;&nbsp;



However, in the time since, all four of the major Korean exchanges <a href="https://pulsenews.co.kr/view.php?year=2021&amp;no=869508" target="_blank" rel="noreferrer noopener">now have strategic investment</a> and partnerships with legacy banks in the country, including KB Bank, the largest in Korea.&nbsp;



Back in Thailand, Brooker Group’s Bulakul thinks that this move by SCB as well as Kasikorn Bank, will mean regulators will act quickly in Thailand and put forward an industry-friendly digital assets framework.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Now that the top two banks are pursuing digital assets, we can expect to see regulations to support the growth of digital assets in Thailand in the near future at a much faster speed,” Bulakul said.</blockquote>



“SCB and Kasikorn Bank will definitely push for mass adoption in Thailand, using the existing customer base. Another reason for fast regulation: these banks will be unable to compete with global and regional peers if they have to endure through regulatory delays,” Bulakul added.&nbsp;&nbsp;



Of course, the elephant in the room is that retail investors in Asia appear to be more interested in crypto than they are traditional equities.&nbsp;



In Korea, the combined volume of the four major digital asset exchanges in the country — Upbit, Bithumb, Coinone and Kobit — is $14.6 billion, surpassing the local stock index called KOSPI’s volume of $14.5 billion.



Down in Thailand, crypto exchanges licensed by the Thai SEC have a monthly turnover of around $3 billion (100 billion THB) while the country’s largest stock exchange, the SET, <a href="https://www.bloombergquint.com/onweb/thailand-s-new-retail-investors-boost-stock-turnover-to-record" target="_blank" rel="noreferrer noopener">reaches that volume in a day</a>.&nbsp;



But with two of the country’s largest banks betting big on crypto, that figure might change.