Currently, there are no licensing regulation for digital asset custodial wallet providers in Thailand. Thus, a digital asset business operator who performs safekeeping of clients’ digital assets with a total value of 15 million baht or more* has to store clients’ digital assets with foreign digital asset custodians not subject to Thai law and supervision of the Thai regulator.

In addition, discussions with relevant enforcement agencies have raised concerns that digital assets may be used as a tool to commit crime such as narcotic drugs and money laundering related crime because the transacting parties cannot be identified, and there are cryptocurrencies which allow transaction information to be concealed (privacy coins). Such features make it easy for digital assets to be used to commit crime.

Given the current circumstances, SEC is proposing to introduce measures for supervision of digital asset businesses in this matter, and the SEC Board Meeting No. 15/2563 dated 3 December 2020 has passed a resolution approving the principles thereof. This proposal aims to ensure appropriate supervision of digital asset businesses, and prevention of misuse of digital assets as a tool to commit crime or as a channel to avoid inspection or seizure of assets by enforcement agency. In essence, the proposed amendments cover the following matters:

            (1)  To specify “the digital asset custodial wallet provider” as a new digital asset business under the Emergency Decree on Digital Asset Businesses B.E. 2561 (2018) whereby an application for a license would be required to be submitted to SEC. Such applicant shall meet the qualifications, and the application be made according to the regulations prior to providing custodial service;  

            (2)  To require the digital asset business operator who performs safekeeping of clients’ digital assets to function as a digital asset wallet provider and provide service to own clients or clients who open wallet with other digital asset business operator who is a wallet provider to enable identification of the clients who make transactions in the system;

            (3)  To prohibit the digital asset business operator from providing trading services for privacy coins to enable monitoring of the executed transactions in the system.   

The consultation paper is available at https://www.sec.or.th/TH/Pages/PB_Detail.aspx?SECID=690. Stakeholders and interested parties are welcome to give comments and suggestions via the website or email: ponwat@sec.or.th, baramee@sec.or.th or napaporng@sec.or.th. The public hearing ends on 26 February 2021. 

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Remark: * Under the current regulations effective since 1 January 2021, SEC allows any digital asset business operator who provides digital asset custodial service to own clients at a value less than 15 million baht to safekeep clients’ digital assets. Once the value reaches 15 million baht, most of the clients’ digital assets must be kept by a digital asset custodial service provider.