The authorities of Thailand have been busy at implementing Cryptocurrency regulation with the country’s own Security Commission and Central Bank embracing Blockchain technology. Known for being one of South East Asia’s leading Fintech hub, Thailand looks to establish and implement key policies needed to regulate this upcoming disruptive space
As regulators around the world are still caught over the debate over what category digital currencies and assets should fall into, Thailand seems to have skipped the debate altogether as authorities announce an emergency decree in the Royal Gazette which officially defines both Cryptocurrencies (a medium of exchanging goods) and digital tokens (rights to participate in an investment, or to receive specific goods), resulting in new laws aimed to govern business operations related to this new form of digital assets. Within a short period of time, the Thai Government has not only legalized few Cryptocurrencies such as Bitcoin but authorities have been also busy at regulating Initial coin offering, granting commercial licensing and amending new tax laws.
Financial Institutional License
The Central Bank of Thailand is preparing all the necessary framework needed to regulate Cryptocurrency related activities and now with more policies being outlined, those interested have to seek further clarification with authorities in order to obtain a permitted license. Existing traditional institution like Commercial Banks and their subsidiaries can now seek permission to deal with a domestic business that engages in the activity of trading Cryptocurrencies as a financial instrument. Essentially, this means locally incorporated banks are allowed to provide Cryptocurrency brokerage services to their clientele and invest on behalf of their client
As of August 2018, the Central Bank of Thailand has made the announcement that it will grant permission to existing Financial institutions to trade digital currencies, as previously Banks weren’t permitted to making any form of trade involving a Cryptocurrency on behalf of their client nor directly invest in digital assets due to risk of dealing with unregulated market that has been under scrutiny and constantly receives skepticism from regulators. The new legal framework intends to established policies aimed to regulate Digital Exchanges, Private Brokers and ICO issuers whereas also granting existing Thai Banks a special license that allows these financial institutions to deal with Cryptocurrencies
Traditional Financial institutions are now presented with the opportunity to partner up with Crypto exchanges to provide more solutions to their clientele especially, now that the Central Bank has given the green light through the issuance of specialized permitted licenses. The Thai Securities and Exchange Commission (SEC) will oversee Cryptocurrency Exchanges whereas the Thai Office of Insurance Commission (OIC) is responsible for granting out licenses to Insurance companies. New regulations have made it mandatory for businesses that are involved in any related Cryptocurrencies activity to register themselves with the country’s authority or face legal consequences as punishment
Authorities have been in favor of legalizing ICO by allowing those interested in fundraising for a startup to officially register with the Securities and Exchange Commission of Thailand who have been tasked to enforce new regulations that cater to all aspects of Cryptocurrencies, including ICO, Dealers, Brokerages Firms and more.
ICO offerings can now be deemed legal in the eye of the law but with restrictions as new policies will enforce several requirements that need to be fulfilled in order to even consider this new form of fundraising. Having to register an ICO with the SEC “within 90 days of the effective date” and receiving approval from the Finance Ministry to conduct business in digital assets are some of the rules have been decided upon. Those interested in an initial coin offering must file an application to the regulators for approval, this is to ensure that certain fundraising ventures get approved hence authorities are interested in screening each individual project in order to get rid of the high-risk or unsustainable proposals
The announcement for new regulations came less than a month after the Digital Asset Management Act BE 2561 which was approved by the Thai cabinet in March, declaring that the SEC will be in charge of Cryptocurrency & ICO regulations. Paving the way for greater Cryptocurrency regulation, the government has proposed that ICO portals that have showcase extensive knowledge surrounding Digital assets market should be allowed to screen national project, a unique suggestion proposed by the Thai government.
ICO portals will be a dedicated marketplace for Initial coin offerings, where entrepreneurs plan to issue their token and SEC approves these projects. There will be select few ICO portals that the SEC will routinely work with that would be in charge of screening prospective projects. Business savvy Blockchain entrepreneurs can propose their idea to a particular ICO portal and once approved the SEC would have the final decision as to whether or not to be granted the permission to host an initial coin offering
In addition, the Thailands SEC has announced that over 50 initial coin offering projects are interested in applying for Licence, 5 ICO portals plan to operate and up to 20 Crypto exchanges intend to formally register themselves with regulators since the legal framework has been officialized
The SEC has legalized 7 Cryptocurrencies in July 2018, which are deemed to be Digitial assets. A unique proposed law is to only permit Cryptocurrencies recognized as ”legal” by the Thai government to be used in Initial coin offering, authorities were quick to rule out which particular Cryptocurrencies will be accepted whereas also declaring other Altcoins as unregulated in the eye of the law.
These are the 7 major Cryptocurrencies to be used for initial coin offering, recognizing seven Cryptocurrencies to be used in this new form of fundraising
Bitcoin, BitcoinCash, Ethereum, Ethereum Classic, Litecoin, Stellar and Ripple
The reason for choosing these seven coins was based on the idea that a Cryptocurrency should be widely traded with a decent amount of liquidity and also does not promote a privacy-centric distributed ledger. For more information visit this article by Lexology and read some official Documentation
Thailand comprehensive Crypto & Blockchain Regulation
The fact that some of the country’s key financial authorities have been swift to enact more comprehensive laws to regulate the blockchain-based assets indicates that Thailand’s government is embracing the upcoming Blockchain revolution by proposing its own framework to enforce
The year of 2018 has been an eventful for Thailand’s Cryptospace as new laws are enacted with the intention of fostering the local Cryptospace, it has been reported that there is an increased interest in licensing since legal framework and laws have been enacted. Since the announcement, there has been a flare of interests from applications such as Exchange operators and Brokers, who are seeking to take advantage of Thailand’s new licensing system that is being established to attract more Blockchain enterprises to the country by offering more regulatory clarity
It has come to a surprise that Thailand has decided to skip the legislative process entirely, passing an emergency decree that essentially legitimatizes certain Cryptocurrencies as a digital asset and lays the groundwork for taxing and regulation. The new laws and the subsequent issuance of Acts are largely viewed as positive for the industry, whereas also seen as a move that creates more barriers to entry for local entrepreneurs. It signals an increasing acceptance of Cryptocurrencies amongst leading Financial authorities and allows more institutional investors to enter the space