SEC restricts initial ICOs to local firms
The Securities and Exchange Commission (SEC) will only allow firms registered in Thailand to launch initial coin offering (ICOs) in the initial stage to raise funds from the domestic market.
Thai firms registered in overseas markets are not allowed to raise funds through ICOs because they are under other countries’ jurisdiction, said Tipsuda Thavaramara, SEC deputy secretary-general.
Firms that have registered their businesses overseas will be allowed to launch ICOs in the second phase as the Finance Ministry has a policy to protect investors’ benefits and regulate digital trade, said Mrs Tipsuda.
Digital asset exchanges and ICO portals are also required to register their businesses in Thailand, she said.
For digital currencies used in digital trade, the SEC will only permit bitcoin and ethereum to be used for trade on local digital asset exchanges based on the rationale that these two cryptocurrencies have ample liquidity and are well-recognised in global markets, said Mrs Tipsuda.
Exchanges intending to incorporate other digital currencies for digital trade need to inform the SEC, whereby the currencies need to have the correct qualifications to meet the market regulator’s trading criteria, she said.
The baht can also be used as a medium of conducting digital transactions, said Mrs Tipsuda.
Exchanges have a duty to screen tokens listed on their trading platforms, with an obligation to conduct a Know-Your-Customer processes for all investors opening trading accounts in order to safeguard against money laundering and fraud.
Exchanges are also prohibited from acting as market makers as the SEC only allows a third party to become market makers, aiming to prevent conflicts of interest and trade manipulation.
The SEC yesterday met with market participants to discuss details of the digital asset decree.
After several rounds of public hearings, a royal decree regulating digital assets took effect on May 14. The 100-section law defines cryptocurrencies as digital assets and digital tokens.
All market participants, including ICO issuers, digital exchanges, brokers and dealers involved with digital asset transactions, are required to register with the SEC within 90 days of the effective date.
The participants must also receive the Finance Ministry’s approval to conduct digital asset business.
Digital asset transactions will be subject to a 15% withholding tax on capital gains if there is a profit.
Sellers of unauthorised digital tokens will be fined up to twice the value of the digital transaction or at least 500,000 baht. They could also face a jail term of up to two years.