Baht, Bitcoin & Blockchain: Thailand’s regulatory and industry update 2021
Thailand’s top seven developments for cryptocurrencies, tokenization, and digital asset businesses
#1. New rules of the game: Big and maybe bad news not only for ICO portals but for Thailand’s whole digital asset industry. The SEC considers reorganizing the market by shifting the responsibilities for utility tokens and investment tokens from the Digital Asset Decree to the Securities and Exchange Act. The Digital Asset Decree will remain applicable only for cryptocurrencies and the very rare type of utility token that is already in a ready-to-use status. Thailand might even ban certain types of cryptocurrencies that have undesired privacy features. The death list of such coins has not been published yet.
#2. BOT on stablecoins: The Bank of Thailand issued on March 19, 2021, a press release on its stablecoins regulation policy. Baht-backed stablecoins that are intended to be used as a means of payment, may be classified as electronic money (e-Money). As for other forms of stablecoins including foreign currency-backed stablecoins, asset-backed stablecoins, and algorithmic stablecoins that are not illegal, the BOT is open to receive comments and feedback before considering regulatory guidelines. Besides, the BOT announced that it is currently in the process of developing a Retail Central Bank Digital Currency to meet the needs of the general public, improve service efficiency in the business sector, and increase access to financial services.
#3. Interview with PUGNATORIUS Ltd. in the blockchain magazine. See the tweet on this page.
#4. Crypto taxation: The smart integration of Thailand into the tax-efficient structuring of global crypto wealth
#5. Tokenomic update 2021: Asset-backed initial coin offerings in Thailand. Commencing March 1, 2021, Thailand allows digital fundraising for property developments that are 80% complete or valued no less than THB 500 million. Real estate developers Sansiri and Ananda are rumored to try out such a digital micro real estate investment trust (REIT), based on a real estate-backed coin offering under Thailand’s new regulatory framework.
#6. DEFI vs. PICO: Decentralized Finance (DeFi) has the same value proposition as pico finance to bank the unbanked and to serve the unserved. Thailand’s Pico finance regulations might conflict with Defi made in Thailand.
#7. Free download: Advanced protection of the crypto wallet by redundant distributed private key recovery backup.
Highly regulated jurisdiction: Thailand did the brave move to be the early adopter of digital asset business regulations. Its 2018 digital asset decrees on crypto-regulation and crypto-taxation have been considered as groundbreaking and were deemed as a guarantee to develop the land of smile into 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 was a merry-go-round ride 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 achieve the expected dynamics. Better sooner than later, a comprehensive revision of the regulatory environment is necessary.
Milestones of Thailand’s cryptocurrency and digital asset history
2013: Under a ruling issued by the Bank of Thailand on July 30, 2013, 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 February 15, 2014.
Thailand was once thought of as the alternative #crypto market to Hong Kong and Singapore. But then the “crypto cold season” came. @Forkast_News sits down with Dr. Ulrich Eder of international law firm Pugnatorius to find out what happened.#STO #ICOhttps://t.co/jAPZTFI1qe
— Forkast News (@Forkast_News) November 12, 2020
2017: The Securities and Exchange Commission, Thailand (SEC Thailand) issued on September 14, 2017 the statement “SEC Thailand’s Viewpoint on ICO”. Subsequently, the SEC Thailand issued on October 27, 2017 a Public Consultation Document Aor Tor Ngor 34/2560 which is commented in “CryptoFinTech in Thailand: The Thai Initial Coin Offering (TICO)”
2018 I: JFin coin, Thailand’s first initial coin offering, has been issued by Jaymart PLC/J Ventures Co., Ltd. on February 11, 2018, for an ICO price of THB 6.6. On February 12, 2018, the Bank of Thailand published a circular letter to Thai banks and financial institutions to separate cryptocurrency transactions from traditional bank business. The Royal Decree on Digital Asset Business as of May 14, 2018, distinguished between cryptocurrency businesses, digital asset businesses, ICO issuing business, and others (mining, custody, etc.). On the same day, the Royal Decree on Digital Asset Taxation constitutes additional taxation rules for digital asset transactions, as explained in detail in “Seven official statements on digital asset taxation in Thailand“.
2018 II: Supplementary regulations had been issued on July 3, 2018, regarding secondary business intermediaries, which are the digital asset exchanges, digital asset dealerships, digital asset brokerage, and the ICO portals as token portal service providers as are subject to the Digital Asset Decree. Additional SEC regulations (15/2561, 16/2561) on July 3, 2018, effective since July 16, 2018, deal with the offering of digital tokens to the public, and regarding rules, conditions, and procedures for approving the provider of the digital keeper system. On July 24, 2018, Thailand’s SEC finally officially started accepting license applications.
2018 III: The Bank of Thailand revoked on August 1, 2018, its circulate letter as of February 12, 2018, that banned banks from any dealings with cryptocurrency and digital asset businesses. It allowed 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. The Bank of Thailand described on August 22, 2018, 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 with 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 digital currency to facilitate interbank transactions and to enhance the efficiency of the Thai financial market infrastructure.
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. The market is treated as saturated by observers. Developments can only be expected in market niches.
Others: The only licensed digital asset dealer is Coins TH (coins.co.th). Digital Asset Brokers 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), and Longroot (Thailand) Co., Ltd. All their websites are in a wait-and-see mode. The scope of permitted activity beyond the traditional ICOs needs clarification. Token X Co., Ltd., a subsidiary of Siam Commercial Bank, is entering the ICO Portal market in 2021 as well.
ICO issuer: As of today, there are still no ICO projects on the Thai market. The only business still dates from the time before the regulations were issued and cannot even claim historical significance for future developments.
2019 I: Bitcoin Co (bx.in.th), Bitkub Online Co Ltd (bitkub.com) and Satang Corporation Co Ltd (satang.pro) had been approved in January 2019 as digital asset exchanges. Coins TH Co Ltd (coins.co.th) was 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 January 14, 2019. The SEC is seeking in March 2019 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.
2019 II: 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 seemed 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.
2020: The Bank of Thailand entered on July 16, 2020, the third-phase development of its “central bank digital currency” (CBDC) and plans to expand its use among large businesses. The central bank is already using CBDC for financial transactions with some big businesses. In September, the BOT will begin using the digital currency for transactions with the Hong Kong Monetary Authority.
Professional services for Thailand’s and international crypto industries
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.