Bangkok, 15 May 2018 ? The SEC will conduct a public hearing on draft regulations to be issued by virtue of the Royal Decree on the Digital Asset Businesses B.E. 2561 (2018), which  became effective yesterday. The new legislation was enacted to regulate the offering of digital assets and businesses undertaking digital asset-related activities. 

SEC Secretary-General Rapee Sucharitakul said: ?The underlying purpose of the Royal Decree on Digital Asset Businesses B.E. 2561 (2018), which has come into force on 14 May 2018, is to regulate and supervise offering of digital tokens and undertaking of digital asset businesses, including exchange, brokerage and dealing. The legislation also aims to protect investors from risks of fraud and deception by dishonest persons, money laundering and exploitation of digital assets to facilitate illegal financial transactions, while ensuring regulatory clarity to facilitate legitimate uses of digital assets.?    

Pursuant to the Royal Decree, digital assets include cryptocurrencies, digital tokens and any other electronic data unit, as specified by the SEC.  

The offering of newly issued digital tokens to the public must be conducted only by limited companies or public limited companies on the condition that such issuers have already obtained an approval and filed the registration statement and draft prospectus with the SEC, and such offering must be carried out through ICO Portal recognized by the SEC Board. Subsequently, the issuers have an ongoing duty to prepare and submit reports to the SEC Office with regard to their financial condition, business operation or any other information which may affect the rights and interest of digital asset holders or investment decision-making.   

Any entity wishing to operate a digital asset business must obtain an approval from the Minister of Finance and meet the SEC requirements regarding, for example, having adequate capital and putting in place measures to appropriately address cybersecurity issues. The approved operator must also conduct Know-Your-Customer (KYC) and Customer-Due-Diligence (CDD) and set up preventive measures against money laundering. Existing operators which have been undertaking digital asset businesses prior to the effective date of the Royal Decree and wish to continue their business operation must file an application with the SEC Office within 90 days (or by 14 August 2018). In such case, the business can continue unless the application is denied.   

In any case, to prevent the use of cryptocurrencies derived from unclear sources of capital, business operators are allowed to offer digital tokens for returns in cryptocurrencies or accept cryptocurrencies from customers only when such cryptocurrencies are traded, exchanged or deposited with the digital asset business operators regulated under the Royal Decree, and such operators must be the financial institutions under the Anti-money Laundering Law. The SEC may exempt the requirements for certain types of digital token offering or digital asset businesses. 

In case of law enforcement, unfair trading of digital assets will lead to offences comparable to those stipulated under the Securities and Exchange Act, for instance, dissemination or disclosure of false information, insider trading, front running, market manipulation.  Offering of digital tokens or undertaking of digital asset businesses without approval are also punishable under the Decree. 

Meanwhile, the SEC is drafting relevant regulations to ensure clarity and appropriate implementation of the Decree. Public consultation on the draft regulations with stakeholders from all sectors will begin this week. 

The public is advised to note that investment in digital tokens or cryptocurrencies overseas is beyond legal protection by the Royal Decree on the Digital Asset Businesses B.E. 2561 (2018). More information on the legislation is available at http://www.sec.or.th/digitalasset and the SEC Facebook Page.

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