KYC to aid cryptocurrency transparency

Know Your Customer (KYC) will be a part of the coming regulatory framework governing cryptocurrencies, says the chief of the securities watchdog.

The framework must make available the identity of those who make digital currency transactions, an area in which KYC can help, said Rapee Sucharitakul, secretary-general of the Securities and Exchange Commission.

The regulations must set standards for information disclosure and transaction reporting, Mr Rapee said.

System security, transaction objectives and utilisation of proceeds arising from initial coin offerings (ICOs) will also come under the regulatory framework, he said, adding that the working panel must seek a method to identify who is making virtual currency transactions other than a domain name used for trading.

The working panel tasked with considering potential measures to regulate digital currencies will meet in the next three weeks to consider whether the current laws are sufficient to regulate cryptocurrencies, Mr Rapee said.

The working panel’s members include representatives from the Bank of Thailand, the SEC, the Finance Ministry and the AntiMoney Laundering Office.

Finance Minister Apisak Tantivorawong said last week that the regulatory framework would take shape within a month.

Mr Rapee said the SEC is collecting comments from recent public hearings on a draft bill regarding ICOs to decide what, if anything, will be changed. The process will conclude in the next two months.

Finance permanent secretary Somchai Sujjapongse said the central bank’s recent letter to financial institutions was to ask for, not force, their cooperation.

“The Bank of Thailand has studied the regulatory framework for cryptocurrency for a while, and there are many guidelines but nothing has crystallised yet,” he said.

In a related development, Mr Somchai said the Finance Ministry will spend 500 million baht to set up the Institute for Financial Innovation and Technology to develop fintech.

The ministry will soon seek cabinet approval for the budget, he said, adding that the institution will take responsibility for selecting the ideas of fintech and developing them for commercial purposes.

Separately, Mr Rapee said fintech will transform the capital market in terms of investor behaviour and business model, as technology will help investors access information at a faster pace and at a lower cost.

“Financial regulators will be disrupted the most [by fintech],” Mr Rapee said, adding that they must change their mindset and demand immaculate information disclosure.