In a recent press release, the Thai SEC has approved four digital asset-based enterprises for compliant operations in Thailand. While other parts of Asia remain hesitant to establish a clear regulatory framework for digital assets, Thailand has taken numerous steps to provide clear guidance and attract businesses throughout Asia and beyond.
Thai SEC and the Approval of Cryptocurrency Exchanges Explained
The region of Asia has featured mixed responses regarding the regulation of digital assets.
China has explicitly rejected the latest wave of tokens by declaring Security Token Offerings (STOs) illegal. Thailand, on the other hand, has taken several steps to provide a clear regulatory framework for digital assets.
Most recently, the Thai Securities and Exchange Commission (SEC) has approved four cryptocurrency exchanges and blockchain startups who filed with the commission for a license to operate.
According to the official statement, a total of seven blockchain-based enterprises applied for such a license. The four that received approval were the following: Bitcoin Co., Ltd.; Bitkub Online Co., Ltd.; Satang Corporation Limited; and Coins TH Company— a licensed broker and trader.
Out of the four, at least one has publicly planned for the use of security tokens. Satang Corp— a Thai-based cryptocurrency exchange with a 24-hour trading volume of around 1 million USDT throughout early December 2018— has announced plans for a Security Token Offering (STO) in early 2019. The offering, with the support of the Thai SEC, aims to raise $9.9 million.
Not all companies who filed for licenses received the green light, however. Two enterprises were rejected: Cash 2 Coin Company Limited and South East Asia Digital Exchange Limited (SEADEX). The reasoning for such rejection varied from a lack of compliant KYC procedures to a failure to meet cyber security standards.
The Thai Ministry of Finance has allowed for these two companies to continue to operate until January 14th 2019. After that date, all digital assets are strongly suggested to have been transferred back to their respective owners. Both companies are free to re-apply for a license to operate in the future.
The last company with a pending status is Coin Asset Company Limited. According to the statement, the continued examination is a result of several leadership changes at the company’s executive level. In the meantime, the company is free to conduct business as it has.
How are Security Tokens Legal in Thailand?
Archari Suppiroj is the Director of SEC Thailand’s FinTech Department. Recently, she exclusively shared the agency’s stance on security tokens with The Tokenist:
1. “Securities Token Offering” or “STO” is a term coined in a jurisdiction where people were debating whether a particular token is a security. If an issuer decides to treat its tokens as securities – the sale of such tokens must follow securities law.In contrast, Thailand chose to come out with a new law on digital assets, so some tokens may already fall under that regime. However, depending on their design, some tokens might be considered securities and fall under the Securities and Exchange Act.
2. If an issuer wants to offer tokens in Thailand, and the design of the tokens does not fall under securities law, the digital asset regime may be used. If it falls under stocks or bonds, then the issuer might not be able to offer as there may be obstacles from the existing regime which need to be fixed. The SEC is looking into this.
3. If the issuer is a registered company elsewhere offering outside of Thailand with no intention to solicit investors in Thailand, then our regimes do not apply.
We can clearly see then, that while countries such as China maintain a hostile attitude towards security tokens, Thailand is working to allow for the compliant integration of blockchain – paving the way for the merger of cryptocurrency trading with traditional stock investing.
What do you think of the regulatory situation for security tokens in Thailand? Will this result in Thailand becoming a hotbed for security token issuance and the regional frontrunner? Let us know what you think in the comments below.
Image courtesy of Securities and Exchange Commission Thailand.