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Thailand’s New Regulations on Digital Asset Investments
12/02/2024
In recent years, Thailand has emerged as a significant player in the world of digital assets and cryptocurrencies. Recognizing the potential of this rapidly growing market, the Thai Securities and Exchange Commission (SEC) has taken steps to create a regulatory framework that balances investor protection with the promotion of innovation.
This article will explore the new regulations implemented by the SEC and their impact on digital asset investments in Thailand which were introduced on the 16th of January 2024.
Key points
- The SEC has removed the investment restrictions on retail investors who are interested in purchasing real estate-based digital tokens.
- The SEC has also introduced new rules regarding the diversification of the business activities of digital asset businesses.
- The SEC now requires digital asset entities to obtain approval before offering custodial wallet services.
- New advertising requirements have been introduced for digital asset companies.
Removal of Investment Restrictions
One of the key changes introduced by the SEC is the removal of investment restrictions on retail investors who are interested in purchasing real estate-based digital tokens. Previously, retail investors were limited to investing a maximum of $8,430 (300,000 THB) in asset-backed initial coin offerings (ICOs). However, with the new regulations in place, these investment limits have been completely lifted, allowing retail investors to explore a broader range of investment opportunities in the digital asset market.
New Rules for Digital Asset Companies Who Wish To Undertake New Business Activities
To ensure the stability and growth of the digital asset market, the SEC has also introduced new rules regarding the diversification of digital asset businesses. Any digital asset business that wishes to expand into other businesses practices must obtain approval from the SEC. This requirement ensures that the entities’ expansion plans align with regulatory standards and helps maintain the overall integrity of the market.
In order for the SEC to approve the proposed new activities for digital asset company must:
- Support or be beneficial to the digital asset business
- Ensure there are no conflicts of interest between the digital asset company and their proposed business activities. Alternatively, the digital asset company must ensure adequate measures have been introduced to protect from conflicts of interests arising.
- Ensure there is no risk to the digital asset companies’ customers or their assets. The digital asset company must have protocols in place to manage any risks.
Custodial Wallet Provider Businesses
In addition to the changes in investment restrictions, the SEC has also addressed the establishment of custodial wallet provider businesses. A custodial wallet provider is a company that provides a digital wallet service to hold and secure users’ cryptocurrencies and other digital assets.
The SEC now requires digital asset entities to seek approval before diversifying into custodial wallet management. This measure ensures that only reputable and experienced entities are entrusted with the responsibility of safeguarding investors’ assets. To receive approval by the SEC to offer custodial wallet services, the digital asset company must:
- Be a publicly listed company or a subsidiary of a publicly listed company.
- Have experience and knowledge of how to manage securities or financial assets etc.
Improved Service Standards
In order to improve the quality and trustworthiness of the digital asset market, the SEC has introduced measures to increase the scrutiny faced by digital asset companies. As per the new regulations, digital asset businesses are strictly prohibited from providing services through an operator that is not lawfully permitted to conduct digital asset activities, or has been sentenced by a Thai court for unlawful digital asset business operations or under investigation by the SEC.
New Advertising Criteria For Digital Assets
New advertising rules and criteria have also been introduced by the SEC for digital asset businesses. These new rules include:
- Removal of the requirement to submit details about advertising campaigns and expenses to the SEC.
- Any advertising campaigns undertaken by a digital asset company must now be submitted to its senior management for review. The senior management must ensure the advertising campaign is in compliance with all regulations before being released. The company must also prepare reviews and monthly reports on any advertising campaigns. These reviews and reports must be presented to the boards of directors. The board of directors must approve each report and submit them on a quarterly basis to the SEC.
- The SEC now has the authority to suspend, change or ask for further information about any advertising campaigns which do not comply with the SEC requirements.
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Frequently asked questions
What are digital assets?
Digital assets are virtual or electronic assets that are stored and traded electronically. They can include cryptocurrencies like Bitcoin and Ethereum, as well as tokenized assets such as real estate-backed tokens.
What are digital asset investments?
Digital asset investments involve purchasing, holding, or trading digital assets such as cryptocurrencies, tokenized assets, or other digital tokens for the purpose of generating returns or profits. These investments can be made through digital asset exchanges or other trading platforms.
What is the digital asset law in Thailand?
The digital asset law in Thailand refers to the regulatory framework established by the Thai government, particularly overseen by the Thai Securities and Exchange Commission (SEC), to govern the trading and investment activities involving digital assets and cryptocurrencies within the country.
What is the role of the Thai SEC in regulating digital asset investments?
The Thai SEC regulates digital asset investments in Thailand by creating and enforcing regulatory frameworks to protect investors and promote innovation in the digital asset market.
What investment restrictions were removed by the SEC for retail investors in Thailand?
The SEC removed investment restrictions that previously limited retail investors to investing a maximum amount in asset-backed initial coin offerings (ICOs), allowing them to explore a broader range of investment opportunities in the digital asset market.
What are the new rules introduced by the SEC regarding the diversification of digital asset businesses?
Digital asset businesses wishing to undertake new business activities must obtain approval from the SEC to ensure their expansion plans align with regulatory standards and maintain market integrity.
What are custodial wallet provider businesses, and what requirements do they need to fulfill according to the SEC?
Custodial wallet provider businesses offer digital wallet services to hold and secure users’ cryptocurrencies and other digital assets. According to the SEC, these businesses must meet specific criteria, including being a publicly listed company or subsidiary, and demonstrating experience and knowledge in managing financial assets.
What are the new advertising criteria introduced by the SEC for digital asset businesses?
The SEC has introduced new advertising rules requiring digital asset companies to submit advertising campaigns for review by senior management and the board of directors to ensure compliance with regulations. The SEC also has the authority to suspend or request further information about advertising campaigns that do not comply with requirements.
What is a digital assets exchange?
A digital assets exchange is an online platform or marketplace where users can buy, sell, and trade various digital assets, including cryptocurrencies and tokenized assets. These exchanges facilitate the exchange of digital assets between buyers and sellers, often charging fees for their services.
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