Regulatory and industry outlook 2020: Baht, Blockchain & Bitcoin

Thailand as the safe haven jurisdiction for crypto-related business ventures

Zoom online event WEDNESDAYS FOR CRYPTO IN THAILAND
WEDNESDAYS FOR CRYPTO

Join the weekly event, each Wednesday at 14.00 ICT (Bangkok time) to discuss Thailand’s regulatory framework on cryptocurrencies, digital assets and blockchain, the influence of the pandemic on fintech ventures, and upcoming developments, projects, and business opportunities including business matchmaking in this industry. Free tickets are available through Eventbrite event management.

  

Thailand did the smart move to be the early adopter of digital asset business regulations. Its 2018 digital asset decrees on crypto-regulation and crypto-taxation have been groundbreaking and have played a significant role in Thailand becoming the digital hub of South East Asia. The article “Baht, Blockchain & Bitcoin – Crypto-Business In Thailand” describes the 2018/2019 status quo.

The development of the blockchain economy has been stormy since then and the formerly highly innovative regulations no longer match the latest developments in the digital industries. As a result, projects and businesses under Thai crypto regulations did not develop the expected dynamics. For 2020, a comprehensive revision of the regulatory environment is as necessary as expected. 

Thai licensed digital asset businesses

Digital Asset Exchanges are Bitkub Online Co., Ltd. (bitkub.com), Satang Corporation Co., Ltd. (satang.pro), BiTherb (bitherb.net), Huobi (Thailand) Co., Ltd. (huobi.co.th), ERX Co., Ltd. (​er-x.io), Zipmex Co., Ltd.  (​zipmex.co.th) Bitcoin Co., Ltd. (bx.in.th) discontinued all forms of trading within September 2019

 

Digital Asset Dealers: The only licensed business is Coins TH (coins.co.th)

Digital Asset Brokers: These are Coins TH (coins.co.th), BiTherb (bitherb.net), and Bitazza Co., Ltd. (bitazza.com).

ICO portals are T-BOX Thailand (tbox.net) and SE Digital (sedigital.io). Longroot (Thailand) Co., Ltd. has been approved by the SEC but has not begun its operation

ICO issuer: As of today, there are still no ICO projects on the Thai market.

New regulations, policy changes, and industry developments  will be monitored here throughout 2020.

法律事务所有泰国有经验的律师团队能讲中国国语,潮语与你会谈或以电邮 微信 或电话.

A brief history of time: Thailand’s place in the blockchain world

30/07/13: Under a ruling issued by the Bank of Thailand, it had been illegal to buy and sell Bitcoins, to buy or sell any goods or services in exchange for BTC, to send any BTC to anyone outside of Thailand, or to receive BTC from anyone outside the country. This crypto ban had been silently dropped on 15/02/14.

14/09/17: The Securities and Exchange Commission, Thailand (SEC Thailand) issued the statement “SEC Thailand’s Viewpoint on ICO“.

27/10/17: The SEC Thailand issued a Public Consultation Document Aor Tor Ngor 34/2560 which is commented in “CryptoFinTech in Thailand: The Thai Initial Coin Offering (TICO)

11/02/18: JFin coin, Thailand’s first initial coin offering, has been issued by Jaymart PLC/J Ventures Co., Ltd. for an ICO price of THB 6.6.

12/02/18: The Bank of Thailand published a circular letter to Thai banks and financial institutions to separate cryptocurrency transactions from traditional bank business.

14/05/18: The Royal Decree on Digital Asset Business: This DAB-Act distinguished between

  • cryptocurrency businesses
  • digital asset businesses,
  • ICO issuing business, and
  • others (mining, custody, etc.).

Regarding the first three activities, all market participants (“stakehodlers”), including had to register with the SEC within 90 days after the effective day and to apply for a license to conduct digital asset business at the Ministry of Finance.

14/05/18: Royal Decree on Digital Asset Taxation: additional taxation rules for digital asset transactions, in particular, withholding tax and VAT obligations. The tax decree is effective immediately without the need for additional regulations. The new, extended taxation rules are explained in detail in “Seven official statements on digital asset taxation in Thailand“.

03/07/18: Regulations are issued regarding secondary business intermediaries, which are

  • digital asset exchange
  • digital asset dealership
  • digital asset brokerage
  • ICO portal as a token portal service provider

03/07/18: SEC regulations #15/2561 regarding the offering of digital tokens to the public, and #16/2561 regarding rules, conditions, and procedures for approving the provider of the digital keeper system (effective date: 16/07/18). Details at “Fit for Thailand’s ICO in seven steps

24/07/18: Thailand’s SEC starts accepting license applications

01/08/18: The Bank of Thailand revokes it circulate letter as of 12/02/18 which bans banks from any dealings with cryptocurrency and digital asset businesses. It allows certain activities to banks and gives more flexibility to their subsidiaries. Under the new announcement, Thai banks and financial institutions are still banned from direct dealings with cryptocurrencies.

15/08/18: Registration deadline for existing crypto businesses as a requirement to maintain operations during the license application process. Qualified exchange companies are Bitcoin Co (bx.in.th), Bitkub Online Co Ltd (bitkub.com), Cash2Coins Co Ltd (cash2coins.com), Satang Corporation Co Ltd (tdax.com), Coin Asset Co Ltd (coinasset.co.th) and Southeast Asia Digital Exchange Co Ltd (seadex.io), and, as a trader / dealer, Coins TH Co (coins.co.th). Digital Coin Co Ltd (thaiwm.com) has issued a letter to the SEC requesting the withdrawal of a license to sell digital assets to the SEC and ceasing the service from September 28, 2018.

22/08/18: The Bank of Thailand described an introductory roadmap for ‘Project Inthanon,’ to develop a proof-of-concept prototype for wholesale funds transfer by issuing a wholesale Central Bank Digital Currency (CBDC). The BOT is partnering eight participating banks in a collaborative project that will use R3’s distributed ledger technology (DLT) platform. The ultimate purpose of the effort is to use the digital currency to facilitate interbank transactions and to enhance the efficiency of the Thai financial market infrastructure.

26/10/18: The SEC issued a notice mentioning that no ICO has yet been licensed under the new regulatory framework in Thailand. Nine tokens are listed which had been objected by the SEC for not having accomplished the licensing procedure because no applications are yet accepted by the SEC.

23/11/18: Thailand’s SEC has warned the public against 14 unauthorized websites soliciting to buy and sell cryptocurrencies and related products. The SEC reiterated that no crypto business has been granted full approval. Seven companies, however, have been temporarily approved while their applications are being reviewed.

29/11/18: The deputy secretary of the Thai SEC raises doubts regarding the STO: “At the moment, we have not decided whether STOs fall under the SEC Act or the Digital Asset Act, but it depends on the STOs conditions and the details in its white paper.”

29/11/18: The SEC warns (Satang/Tdax case) on the Thai-based ICO under foreign legislation. “An STO affiliated with Thai investors launching in an international market at this point would be guilty of wrongdoing under the Digital Asset Act. A company making such an STO launch would be trying to avoid regulated fund-raising channels, such as sales of ordinary shares or sales of digital assets via IPO portals.” Details at “Seven steps for the offshoring of ICOs“.

01/12/18: Despite market expectations, no regular SEC license for digital asset businesses (exchange, dealer, broker, ICO portal) or for an ICO has been issued yet. Seven companies are operating in Thailand under a temporary approval while their license applications are being reviewed.

08/01/19: Bitcoin Co (bx.in.th), Bitkub Online Co Ltd (bitkub.com) and Satang Corporation Co Ltd (satang.pro) are approved as digital asset exchanges. Coins TH Co Ltd (coins.co.th) is approved as a broker and dealer of cryptocurrencies. Cash2Coins Co Ltd (cash2coins.com) and Southeast Asia Digital Exchange Co Ltd (seadex.io) were denied licenses for digital asset exchanges and have to discontinue business until 14/01/19.

01/03/19: The SEC is seeking public comments on the proposed rules for data submission by digital asset business (DAB) operators and initial coin offering (ICO) portals. The proposal aims to promote a clear understanding and a standardized protocol for monitoring and supervision of digital asset businesses and to reduce the necessity for case-by-case data submission. Details.

22/04/19: SE Digital Company Limited (“SE Digital”), a 99.99% subsidiary of Seamico Securities Public Company Limited, with the primary business objective of operating the digital assets business applied to the SEC to operate as an ICO Portal. The Board of Commissioners of the SEC has granted SE Digital, the approval to operate as an ICO Portal beginning on 10 April 2019. The approval is subject to SE Digital having demonstrated the readiness of the ICO Portal platform and the company having been audited by the SEC relating to the readiness of the operational systems to provide ICO Portal services within 180 days of the receipt of the approval.

02/05/19: SEC deputy secretary-general Tipsuda Thavaramara told the Bangkok Post in an exclusive interview: “If the token’s underlying asset is deemed to be securities as defined under the Securities and Exchange Act, it will continue to be governed under the Act even if it is issued via a digital process. If, however, the token is not deemed as having securities features, it will be governed by the digital asset royal decree.”

As a consequence, digital asset exchanges, brokerage firms, dealers and ICO portal service providers seem to be excluded from security tokens, STOs and other securities businesses. Whether this is the final stance of the SEC on the digital asset royal decree, time will tell.

07/06/19: SEC Announcement on Private Placements of digital assets. PUGNATORIUS Ltd. provides advice and guidance on the marketing (roadshow, etc.) and offering of digital assets by (i) registration statement and prospectus for retail customers or (ii) in a private placement to Institutional Investors, ultra-high net worth individuals (UHNWI), etc.

July 19: Thai digital asset exchanges will be required to report digital asset trades with a value exceeding THB 5 million to commercial banks, then the banks must report such transactions to AMLO.

December 4, 19: Public hearing No. Kor.Thor. 44/2562 regarding the revision of rules and regulations for digital asset operators and system providers offering digital token

20/01/20: ERX and Zipmex are licensed as digital asset exchange. Zipmex did all the expensive mistakes which resulted in a twelve-month application wait loop. 

Pending: In 2020, Thailand’s digital asset framework will be enhanced by investor protection for damages caused by digital asset intermediaries.

Pending: It can be expected that regulatory guidance on asset-backed tokens will be published soon. This deals with the tokenization of traditional assets like real estate, gold, equity, and bonds. Details are discussed at “Proof of Asset: Seven criteria for the asset-backed token due diligence“.

Professional services in Thailand’s and international FinTech sectors

PUGNATORIUS Ltd. provides Thai and foreign investors and stakehodlers solid and realistic advice on Thailand’s regulatory framework and cross-border opportunities in digital asset business and ICO/STO projects. The law firm has been from the beginning one of the few pioneers and industry-makers in Thailand’s industry 5.0 markets. Backed by a broad overview and unique experiences with crypto exchanges, ICOs, trading, brokerage, and mining ventures, a solid working relationship with Thailand’s SEC, and the tax structuring know-how for cross-border ventures, the Bangkok law firm offers comprehensive support to successfully accomplish blockchain-linked businesses in Thailand and abroad.

The firm’s lawyers are involved for some years in virtually each and every aspect of this exciting industry in Thailand and abroad. This includes legal and regulatory aspects, the support of new ventures, exchange, trading, brokerage, custody, mining, token listing requests and, as an essential element, the tax planning of crypto operations as well as tax planning of private crypto wealth. Based on this, PUGNATORIUS Ltd. possesses comprehensive experience and expertise.

The law firm offers mainly these seven legal and tax services:

  • Thai crypto-compliant company formations
  • Regulatory-avoiding and tax-efficient cross-border structuring
  • Digital asset and financial services licensing
  • Blockchain and ICO advisory services
  • ICO litigation and anti-litigation protection
  • Cryptotransaction support services including OTC trades
  • Legal opinions and professional statements

Details can be found at “Legal advice, tax structuring, transaction support services and business matchmaking on Fintech, cryptocurrency and digital asset ventures“.

LinkedIn

Disclaimer: A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice nor an attorney-client relationship. Secure your Bitcoins in paradise.

Comments are now closed for this article.