Regulatory and industry update 2019: Baht, Blockchain & Bitcoin
Thailand as the safe haven jurisdiction for crypto-related business ventures
Thai licensed digital asset businesses: List of Digital Asset Exchanges:
- Bitcoin Co., Ltd. (bx.in.th)
- Bitkub Online Co., Ltd. (bitkub.com)
- Satang Corporation Co., Ltd. (satang.pro)
- BiTherb (bitherb.net)
- Huobi (Thailand) Co., Ltd. (huobi.co.th)
List of Digital Asset Dealers:
- Coins TH (coins.co.th)
List of Digital Asset Brokers:
- Coins TH (coins.co.th)
- BiTherb (bitherb.net)
- Bitazza Co., Ltd. (bitazza.com)
ICO portals are
- Longroot Thailand (longroot.co.th)
- T-BOX Thailand (tbox.trade)
- SE Digital
According to an announcement of the SEC as of July 11, 2019, ten applications for digital business licenses are still pending.
Regulatory framework: Thailand did the smart move to open the markets under (mostly) clearly defined rules. With the publishing of two Royal Decrees, various regulations by the SEC, and, finally, announcements by the Bank of Thailand, the regulatory framework for digital asset businesses in the land of smile is completed. Thailand offers regulated crypto ventures at a reasonable level. The article “Baht, Blockchain & Bitcoin – Crypto-Business In Thailand” describes why you should not do your ICO and crypto business in Thailand despite but because of its regulatory framework.
Sophisticated legal support: PUGNATORIUS Ltd. 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 a comprehensive support to successfully accomplish blockchain-linked businesses in Thailand and abroad.
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.
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 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
- Legal opinions and professional statements