The Securities and Exchange Commission (SEC) recently announced a regulatory framework for initial coin offerings (ICO) and ICO portals that took effect on July 16.
However, a lot of cryptocurrency investors are still asking what will be regulated and what will be considered legal by the government of Thailand. It is important to note that after the regulation framework takes effect, Thailand will be one of the first countries to award licences to ICO portals.
The new framework is part of a wider approach by the government to legalise ICO markets and cryptocurrency. The initiative started with two royal decrees issued in March, which had two aims: to regulate transactions related to digital assets and to amend the Revenue Code to collect tax on digital assets.
According to the framework, any type of token that will be offered to Thai investors will fall under SEC regulation. To clearly differentiate token categories, the SEC has divided ICOs into three types: investment tokens, utility tokens and cryptocurrency.
The framework made it clear that token issuers cannot sell them directly to the public but must make offerings through an ICO portal that will be approved by the SEC.
Any party seeking to legally launch an ICO in Thailand will need to go through the following process:
product screening by ICO portals;
preparation and issuing of a prospectus (a document that outlines the business plan or roadmap, token information, sales, and other details);
SEC approval within 60 days;
disclosure of information about the coin to the public.
To become a licensed ICO portal, an applicant must meet the following requirements:
Must be a registered local company in Thailand with minimum registered capital of 5 million baht.
Directors and executives need to meet qualifications set by the SEC (never having been declared bankrupt, etc).
The company has to be ready to manage an ICO launch in terms of IT, compliance and security protocols recommended by the SEC.
If the ICO portal has a subsidiary company, it needs to be related to the portal to ensure that there will be no conflict of interest.
In addition to the requirements mentioned above, aspiring ICO portal operators must submit an application fee of 50,000 baht and an annual fee of 100,000 baht (payable on Jan 31 every year). After receiving the application, the SEC commits to render a decision within 90 days.
Approved ICOs can be offered in unlimited amounts to high-net worth-investors, venture capital firms and private equity funds. However, the investment for each retail investor is limited to 300,000 baht. ICO issuers are only allowed to receive payments in Thai baht or seven approved cryptocurrencies: bitcoin, ethereum, bitcoin cash, ethereum classic, ripple, litecoin and stellar.
The SEC has also supplied a list of reasons why an ICO portal application will not be approved:
The applicant avoided or didn't follow SEC regulations.
The applicant did not comply with government policy.
The impact of the ICO portal in the local capital market is considered to be negative.
The applicant's data is inaccurate or inaccessible.
Currently, Blockchain Capital Group Holdings Co Ltd is working with SEC to obtain an ICO portal licence for its subsidiary, Bitkub Blockchain Technology Co Ltd, and an exchange licence for bitkub.com.
Thawatchai Kiatkwankul, director of corporate finance in the equity department at the SEC, has said that out of several proposals, five ICOs are ready as initial pilot projects under the framework.
Topp Jirayut Srupsrisopa is a co-founder of bitkub.com