Buying Property in Thailand for Cryptocurrency: Risks and Benefits

In the last five years, we have been hearing about and even encountering cryptocurrencies more and more often. And the recent geopolitical events and the ensuing restrictions have become the impetus for us to finally get to know this new type of funds more closely. Investors interested in buying real estate in Thailand, began to see ads that it is possible to buy a certain object with cryptographic coins, in other words, buy a Thailand home, using digital assets. First, let's understand what blockchain is and how safe it is to store and transfer this kind of funds.

What is blockchain, and how do crypto investments work

Blockchain is a computer network referred to as a distributed ledger. In simple words, it is a network made up of powerful computers spread across different corners of the world. Connected to each other, these computers are responsible for building so-called blocks, or simply put, units of information. The essence of such a network is its chain principle, designed to serve as protection for the data being transmitted. Each block stores cryptographically encrypted results from the complex recalculation of data of that block. And this result changes from block to block. In each new block, the result contains information about all previous blocks plus the information about the current block. The technology makes the blockchain difficult to hack or trick into adding fraudulent data. The computers that form such a network are responsible for recalculating the blocks, and in return for their work, they are rewarded with a token of this blockchain, otherwise known as a digital coin, which is what we used to call crypto. And the more we use that blockchain, the more expensive its coin becomes. The most common blockchains are bitcoin and ether (Ethereum).

And while such assets are good for informed investment and speculation, they are very difficult to use in everyday life and to pay for goods and services. The problem is that such currencies are very volatile - their price can change by 20 percent or more in just a day. But there is a solution here as well. In the blockchain space, there are so-called stablecoins. The word is self-explanatory in the sense that these coins are stable. Stability is achieved by tying these coins’ value to traditional, fiat money like the U.S. dollar or the euro. Such pegging is done at the expense of the real stock of money, which provides stability for the cryptocurrency. So, these are the tokens used by real estate developers, enabling them to buy real estate for crypto assets. Among the most common coins are products of the largest companies Circle and Tether, their coins, which are pegged to the U.S. dollar, are called USDC and USDT, respectively.

However, it is worth bearing in mind that the vast majority of countries have not yet legalized operations with cryptocurrencies. And even in countries where the purchase and sale of cryptocurrencies are considered legal, the purchase of goods and services for such funds remains in a gray area. Also, various exchanges that allow you to buy and store crypto have various restrictions, which you should research before depositing funds in them. This is why this type of transaction should be handled with caution and should be studied before making a transaction. Let's take a look at how things stand with cryptocurrency transactions in Thailand.

Crypto Legislation in Thailand 

The attitude of Thai authorities towards cryptocurrencies is not very different from that of Turkey, Russia, or European countries. There are no special bans on cryptocurrency trading - that is, you can freely sell, buy, and speculate using cryptocurrencies at the exchanges designed for this purpose. However, as in Turkey, they are not allowed to pay for goods and services in Thailand. 

Following Singapore, Thailand is often advertised as a "crypto-hub," which in reality is not exactly true. After the collapse of one of the largest FTX exchanges, a major Thai exchange Zipmex was hit hard, leading to stricter legislation in the country. In particular, they are now discussing a complete ban on advertising and promotion of crypto funds through influencers. How far this law will extend to the promotion of real estate transactions is not yet known. 

The country's government plans to create its own digital currency, similar to China's digital yuan. Such a currency, referred to as CBDC, could appear in Thailand in the coming months. It will be fully controlled by the state and taxed accordingly.

How cryptocurrencies can be manipulated by scammers

In the case of blockchain investing, however, you need to be on your guard against fraudulent schemes. The most common one is to convince the user to share their secret key with the crypto wallet. This can be compared to calls from scammers trying to convince bank users to reveal the three-digit code on a debit or credit bank card. So be vigilant, because no employee of a legitimate exchange or crypto service will ever ask you to disclose your wallet details.

How cryptocurrency transactions are handled in Thailand

Real estate transactions involving digital assets in Thailand come in several types:

• transactions directly with a developer using exchanges
• transactions with a developer using decentralized solutions
• transactions through intermediaries

The first one is when you transfer your crypto assets directly to the developer's account. This is the most reliable type of transaction. It is convenient especially in the current geopolitical situation, when, for example, Russian citizens have imposed restrictions on the withdrawal of funds outside of the Russian Federation or on the use of their bank accounts outside of their home country. Thus, in making such a transaction, you simply transfer your coins from your wallet to the wallet of the developer.

However, in this case, you need to make sure that the exchange you use will allow you to do this. For example, Binance, the largest international exchange of Chinese origin, has imposed restrictions on profiles registered to Russian passports. Therefore, the transactions in Thailand may require an account on another exchange, or a decentralized blockchain solution like Metamask wallet or Trust Wallet, which does not require KYC (know-your-customer) procedures.

Transactions through intermediaries are considered less trustworthy, but they can help if there's no opportunity to buy crypto in the right amount for you. According to Thailand-Real Estate you can buy a premium apartment in Phuket for up to $3,000,000. However, keep in mind that any intermediary requires additional checks and thus makes the transaction riskier than when only two people are involved. In countries like Thailand or Turkey, an offline exchanger, which can sell you crypto for fiat money, can be such an intermediary.

Is it worth buying real estate for cryptocurrency in Thailand

To make such a deal, we recommend that you first familiarize yourself with the following factors and do your own independent research:

• which method and strategy the developer is offering you
• whether you have access to an exchange and whether the exchange places restrictions on your account
• what currency the developer is offering and if it's trustworthy
• whether there are any intermediaries in the transaction, and if so, who they are and what percentage of the amount they want to get

Using cryptocurrencies to buy houses or apartments in Thailand is possible and not directly prohibited by the law.