Uncertain future: The Thailand ICO markets 2020

Getting Things Done: The Thailand ICO

Getting Things Done: The Thailand ICO

Initial Coin Offerings – where do we stand now


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Start-up financing: A start-up business can be financed through equity contributions, by obtaining a loan, or by selling its future products on the public markets. The third method has been developed and made available by the design of digital tokens and the development of blockchain technologies. In all three financing alternatives, the success rate of start-ups is measured on a global scale as below 10%. This is unchanged for decades and no particularity of digital asset businesses.

Scams of the past: International scam structures ruined the reputation of free and unregulated ICO offers. After US$ 30 billion had been invested and mainly lost, there is no more stupid money available for crazy projects. As a consequence, Thailand introduced in 2018 a regulatory framework for initial coin offerings.

Purpose: The regulatory framework has the purpose to create a controlled and protected legal and business environment for the development of an ICO market. It requires initial due diligence on the feasibility of the start-up as a service for prospective ICO investors and token buyers. Its aim is to protect the market and stakehodlers against exit scams and fraudulent ICO projects.

From utility to investment: After the ICO market had been poisoned by utility token offerings without a solid business model, the fully licensed investment token promises to start its success story in Thailand’s crypto markets. However, even months after three ICO portals have been approved by Thailand’s SEC, the ICO markets are still super dry.



Regulations as a marketing tool: Thailand’s fintech legislation creates the perfect marketing tool to attract international investors in crypto-businesses. The fact that each ICO project has to

  • be audited by an independent, government-licensed ICO portal company and, in addition,
  • obtain the license by Thailand’s Security Exchange Commission, and, even more,
  • after the licensing process has to fulfill strict compliance requirements,

is an invitation for ICO stakehodlers from all over the world to bring their ICO project to Thailand and to benefit from the trust and confidence in the regulatory framework in the land of the smile.

Seven steps to getting the ICO done in Thailand

This post describes the seven essential elements to get the ICO successfully licensed and in which areas PUGNATORIUS Ltd. can assist and support.

#1. Business, business idea, and problem-solving: An ICO is typically accomplished by a start-up company or for new (start-up) products. Products are goods or services including granting access to a network.

For an ICO, these products are in a certain status of development and typically not ready for the market yet. Finished and available products are subject to tokenization projects which under certain conditions can be structured as ICO. Any indirect participation in the start-up’s dividends, interest payments, royalties, or similar benefits results in a security that can’t be done under Thailand’s digital asset framework.

The project has to be sustainable. It has to fulfill the legal and economic requirements to establish a long-term business in its market. Seven relevant key data are

  • the corporate entity and its legal and tax arrangement,
  • the shareholders and its experiences and background,
  • the internal corporate constitution and structure, and
  • the directors and executives,
  • the feasibility of the business venture,
  • reasonable roadmaps and long-term procedures,
  • a certain form of proof of concept for the venture.

The business model has to give evidence for successful products. High profitability is not required, because the token investors would/should not participate in this.

#2. Blockchain technology: Compared with a centralized database, blockchain technology is more expensive, much slower and has limited privacy. The blockchain-based business has to utilize particular blockchain advantages that over-compensate these economic disadvantages. Practical examples are that the business utilizes the blockchain

  • as a record-keeping tool for the long-term storage of information, data, and files,
  • as proof and verification tool, immune from data falsification with complete traceability.
  • as proof of work for certain tasks.

Blockchain advantages mainly require that the public has the option to verify each transaction directly on the blockchain, apart from the web or phone application. Peer-to-peer platforms like Uber and AirBnB maintain web-based centralized databases and see no advantage in the blockchain technology.

#3. Feasible token economy model: Neither a casino jeton nor a fun coupon – the intrinsic characteristics and associated rights of the token are essential. It has to be clear, which and how many products are subject to the token, and how this value is assured, by a smart contract, an empty promise or something in between.

The token which is sold in the ICO needs such utility as its intrinsic value. The smart contract has to be verifiably designed to reach this aim. This strong intrinsic characteristics and associated rights have to be truly and clearly described.

#4. Whitepaper: The offering prospectus should contain all required or necessary information. The potential token buyer will look into these four core aspects:

  • Description of the implementation status of the start-up business.
  • Description of the prospected sustainability of such business.
  • Description of the intended use of the ICO proceeds and how this is assured.
  • Description of the particular use purpose and the counter value of the token.

#5. Legislation and regulations: The ICO has to meet the applicable regulations for any pre-sales, roadshows, and similar arrangements, for the country in which the ICO company is located, and in any jurisdiction where the token is offered.

To accomplish an ICO under foreign law, although the key personnel, key buyer base, or the start-up is located in Thailand, should be carefully reviewed under feasibility and legality aspects.

#6. ICO procedure: The procedures of the Thai ICO have to follow Thailand’s complex regulatory framework. Key aspects are the Thai company as ICO promoter and the requirements regarding its internal constitution, shareholders, and officers. The approval by a private ICO portal company is followed by the licensing by the SEC. Limitations under laws, regulations, and license apply.

Currently, two ICO portals are fully licensed and accessible fo ICO promoters. Under the early adoption gold digger market conditions, it needs a smart strategy to successfully enter into arrangements with these two oligarchs.

#7. ICO limitations: When conducting ICO transactions, only four plus one coins are excepted as a medium of exchange. These are Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Stellar (XLM), and Baht (THB). The SEC rectifies this list with the criteria of sufficient market liquidity, a well-designed decentralized system, and the ability to use a trading pair with other cryptocurrencies.

The legal requirements do not end with the ICO itself. Additional requirements cover the start-up, the use of the proceeds, and the ICO itself. The long-term success of the ICO must not be identical to the long-term success of the start-up and its products.

ICO advisory and professional services in Thailand’s Fin-Tech sector

PUGNATORIUS Ltd. is the Bangkok-based specialist provider of legal services and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property acquisitions and developments. Sophisticated solutions in a complex legal environment. Serious legal and tax advice in the land of smile.

The law firm advises and supports on challenging ICO projects in a multi-regulatory and multi-legislation environment. The firm’s lawyers are involved for some years in virtually each and every aspect of the crypto industry in Thailand and abroad. Based on this wealth of experiences, an international clientele is guided through the corporate, foreign investment, taxation, fintech and digital asset regulatory framework. This includes the negotiations with the ICO portal company, Thailand’s SEC and other regulatory authorities.

With respect to cryptocurrencies, digital asset businesses and ICOs, the Bangkok 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
  • Thai and cross-border tax structuring
  • Cryptotransaction support services
  • 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“.


Disclaimer: A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice, nor an attorney-client relationship, nor equips with the insights, tools or skills to do this without the law firm.

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