Five years ago, Siam Commercial Bank CEO Arthid Nanthawithaya announced a plan called ‘Going upside down’, with digital transformation at its heart. Taking a majority stake in a crypto exchange, as the bank did in November, is probably an even greater inversion of the norm than even he had imagined.
SCB is the original: Thailand’s first bank, established by royal charter in 1907, with King Vajiralongkorn as its single largest shareholder. It is a regular winner of our country awards for its prudent combination of growth and stability, with usually the best ratios and other metrics in the industry.
So for it to buy 51% of Bitkub, Thailand’s leading digital asset exchange, for Bt17.85 billion ($537 million) is a big deal.
To Bitkub founder Jirayut Srupsrisopa, the deal represents an elevation of his business and his industry to the national mainstream
To Bitkub founder Jirayut Srupsrisopa, the deal represents an elevation of his business and his industry to the national mainstream. His company has “become an important part of Thailand’s digital economy infrastructure”, he said in a November 2 statement. “Bitkub is no longer just a startup and is now becoming a necessary part of the infrastructure critical for Thailand’s financial industry 3.0.”
He would say that. But he’s also right. Arthid, in turn, says that the purchase is in line with SCB’s strategy to upgrade to a financial technology group, and it is telling that he thinks a crypto exchange is a necessary part of that definition.
Series of choices
We are going to see more of this. Elsewhere in southeast Asia we’ve already seen DBS launch a digital asset exchange with crypto (both trading and custody) among its pillars. Singapore’s UOB is collaborating with a local digital securities exchange, ADDX, on digital bond servicing, and it would be no surprise to see that relationship deepen. Union Bank of the Philippines has built a partnership with Hex Trust, the Hong Kong-based digital asset custodian.
As crypto becomes steadily more institutionalized, banks are going to have to engage with it, and the method of doing so represents a series of choices. Do they build their own operations, or partner with (or acquire) free-standing crypto startups? Do they aim to offer brokerage for their clients, or is custody the better fit, or both? Do they attempt to drive the tokenization of illiquid assets like bonds or private capital?
As they make these choices, they will also have to deal with the shifting positions of regulators, and make some decisions about appropriate risk management and deployment of capital. But it’s becoming increasingly clear they can’t ignore crypto anymore.
