Thai Regulators Unsure of Legal Framework for Security Token Offerings
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Thai Regulators Unsure of Legal Framework for Security Token Offerings

Regulators in Thailand are unsure of the best means to regulate security tokens. Thailand’s own securities authority has acknowledged there are currently several possibilities, but the peculiarities of security tokens have resulted in a lack of clear regulatory guidelines. Now, some are worried that the ambiguity will drive business out of Thailand.


Security Token Regulations: Are New Laws Needed, or do Existing Laws Suffice?

Regulators in Thailand remain hesitant in providing a clear regulatory framework for capital markets’ latest trend: security tokens.

Such tokens, which initially enter the market through a Security Token Offering (STO), entail the tokenization of real-world assets. These can include ownership in real estate, investment funds, equity, and even fine art.

In the United States, leadership from the Securities and Exchange Commission (SEC) has implied that security tokens— and most cryptocurrencies in general— need to abide by the existing securities laws.

Officials in Thailand however, aren’t so sure.

Security Token Regulations in Thailand Explained

Tipsuda Thavaramara is the Deputy Secretary-General of the Securities and Exchange Commission Thailand.

She has recently made it known that she is unsure of whether STOs fall under the digital asset category, existing securities regulations, or— neither.

If STOs feature some of the characteristics seen in traditional fund-raising securities, they could be similar to her agency’s classification of Initial Public Offerings (IPOs). If this were the case, they would be susceptible to the existing laws under Thailand’s SEC Act.

Alternatively, security tokens could fit under Thailand’s new ‘digital asset’ category, enacted through its Digital Asset Act. If so, the Digital Asset Royal Decree would have the major sway in the appropriate regulatory enforcement.

Thirdly, Thavaramara has said that STOs could reflect features similar to stocks and bonds. However, she admits that if this were the case, the existing regulations might cause some obstacles. Such ‘obstacles’ would be enough to prevent STOs from occurring.

Given such a situation, the SEC of Thailand is currently examining the security token industry, along with current regulations which might inhibit such tokenization, says Thavaramara.

“At the moment, we have not decided whether STOs fall under the SEC Act or the Digital Asset Act, but it depends on the STO’s conditions and the details in its white paper. The SEC will have to consider carefully how to respond to each STO.”

Could a Lack of Clear Regulations Push the Security Token Industry Elsewhere?

Prinn Panichpakdi is managing director of CLSA Securities Thailand, part of a 32-year old brokerage and investment group.

Panichpakdi says the security token industry is taking off quickly. Yet the lack of clear regulations are preventing any serious STOs from launching in Thailand. In fact, he is concerned that interested entities will go elsewhere, where regulatory compliance is clear:

“The environment is changing fast. If Thailand is not ready to issue these kinds of products, I believe that the issuer will launch in other markets, so the SEC will have to consider how to deal with this.”

Recent news suggests Panichpakdi is correct.

Satang Corporation, a Thai-based cryptocurrency exchange, announced the launch of an STO just one week ago. They plan to seek approval from the U.S. SEC and list their token on the US-based Alternative Trading System (ATS) tZero.

What do you think about the current regulatory atmosphere for security tokens in Thailand? Which direction should they take when it comes to the regulatory enforcement of tokenized securities? Let us know what you think in the comments below.


Image courtesy of the SEC Thailand.

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December 4, 2018

About Author

SiaMohajer Sia Mohajer is the cofounder of The Tokenist and Coin Crunch. Sia founded Next Ventures in 2013. He believes in a decentralized future and a new era in global finance.