Digital Asset Business

The control of the digital asset business is currently the responsibility of the Minister of the Ministry of Finance and the Securities and Exchange Commission (“SEC”), in accordance with the Royal Decree on Digital Asset Businesses, 2561 B.E. (2018 A.D.) (“the Royal Decree”), which was published in the Royal Gazette on 13 May 2018, and became effective on 14 May 2018.

Keywords: Mazars, Thailand, Digital Assets, SEC, Royal Decree, Royal Gazette, Cryptocurrency, Digital Token, OIC

28 May 2018

A summary of the Royal Decree is set out below:

Subject

 

Details

Types of Digital Assets  

Digital assets refer to both Cryptocurrency and Digital Tokens, which are defined as follows:

Cryptocurrency” means an electronic data unit created on an electronic system or network to be used as the medium of exchange for acquiring goods, services, or other rights, including an exchange between digital assets.

Digital Token” means an electronic data unit created on an electronic system or network for the purpose of specifying the right of a person to participate in an investment in any project or business, or to acquire specific goods, services, or other rights under an agreement between the issuer and the holder.

Note: The SEC is empowered to define any other electronic data unit with a similar purpose to cryptocurrencies and digital tokens as digital assets.
Controlled Activities Offering newly issued and existing issued Digital Tokens to the public
Restrictions:

-  The issuer of newly issued Digital Tokens or existing Digital Tokens must be in the form of a limited company or public limited company.

-  The offer of newly issued digital tokens or existing digital tokens must obtain the prior approval of the Office of the SEC, and must be conducted through a service provider of the ICO Portal which has been approved by the SEC.

Note: -  The approved Digital Token must only be offered to investors under the conditions set out by the SEC.
Conducting a Digital Asset Business
Restrictions:

-      Entities conducting the following three types of digital asset businesses must obtain the prior approval of the Minister of Finance with the recommendation of the SEC:

(1)   Digital Asset Exchange Centre

(2)   Digital Asset Broker

(3)   Digital Asset Dealer

-      To conduct a digital asset business, the entrepreneur approved by the SEC must comply with the rules, procedures, and conditions set out by the SEC, and meet the following criteria:

(1)   Have adequate underlying capital resources as a guarantee for business operations and other risks;

(2)   Have reliable security measures in place for the protection of customers’ assets;

(3)   Have reliable operating systems and data security systems to prevent cyber or other types of attacks;

(4)   Have suitable accounting systems based on the type of business, and arrange for an auditor approved by the Office of the SEC to examine its accounts;

(5)   Have a reliable Know Your Customer scheme for checking client information, and have anti-terrorism and anti-money-laundering systems in place.

Note: The Minister of Finance is empowered to define any other business as a digital asset business by on the recommendation of the SEC.
Sanctions   A person who violates or does not comply with any provisions set out in the Royal Decree shall be liable to criminal penalties and civil sanctions.
Transitional Provisions   All entrepreneurs conducting a digital asset business before the Royal Decree comes into effect and that intend to continue doing so shall be required to apply for approval from the Minister of the Ministry of Finance within 90 days of the law taking effect. Such entrepreneurs are able to continue conducting their digital asset businesses only after submitting the application for approval.

For more information, please visit the SEC, the OIC, and the Ratchakitcha website

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