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15 May 2018

Thai Economy

Digital Asset Law Aimed at Protecting Retail Investors and Promoting Financial Stability (Business Brief No.3741)

Thailand is the first country that has created legal clarity on digital assets by classifying digital assets into cryptocurrency and digital token, as well as digital business into four types, covering those in the ecosystem, as follows:
1) Digital asset trading center (which is equivalent to a central market where digital assets are exchanged);
2) Digital asset broker;
3) Digital asset trader (which performs similar tasks as a digital asset center, but their actual trading is undertaken over the counter); and,
4) Other activities in accordance with the proposal of the Securities and Exchange Commission of Thailand (SEC) made to the Finance Minister
The new digital asset law is intended to supervise retail investors and promote roles, as well as responsibilities of related businesses. All sections under the law require companies selling digital token or issuing initial coin offering (ICO) to comply with the SEC rules and regulations, including their information disseminated to investors and qualifications of their directors and executives. In addition, businesses are required to submit their operating performance and financial position reports to the SEC. Failure to comply with the regulatory requirement may result in criminal and civil charges.
Because investment in any channel will invariably incur risk, there is a need to screen buyers so that they have the required qualifications, thus helping reduce risk for investors. The move by relevant authorities to enforce rules and regulations requiring digital asset sellers to bear the same responsibilities as companies issuing stocks or debt securities is deemed normal. Even though such rules and regulations may affect the period required to issue ICO, they will unlikely restrict business opportunities. 
Aside from the new digital asset law, Thai authorities are pressing ahead with other guidelines to develop startups, for example through the application of blockchain technology. Many leading financial institutions, including the Bank of Thailand’s regulatory sandbox program, have offered channels for firms to develop fintech utilizing blockchain. Additionally, methods such as P2P lending are being offered. Moreover, relevant authorities have begun to promote new fund mobilization channels. For instance, the Stock Exchange of Thailand has introduced LiVE as a funding platform for startups this year. As a result, the startup industry and the development of new technologies overall in the country look promising, given that various aspects are evolving in a stable and sustainable manner.