The issuance of the notification is in response to the consideration that (1) digital asset traders should be informed about potential risks associated with the use of digital asset storage services provided by DA operators for their risk assessment and decision making, since digital assets are created on blockchain technology with storage in digital wallets, a means of storing different from those of other assets, and that (2) there have been reports about a number of foreign DA operators experiencing liquidity problems and asset-keeping risks in this regard.

The SEC, in the past, instructed DA operators in writing to disclose information and warn their clients about potential risks associated with the storing of digital assets on the operators’ websites and applications (30 December 2022) and considered that related applicable rules for proper and consistent practices of DA operators should be put in place. A public hearing on the proposed draft regulation was held during 4 July-3 August 2023, with which most of the respondents had expressed their views in agreement.

As such, the SEC has issued a notification prescribing the requirements for information disclosure and risk warnings to clients of DA operators* with the following salient features. 

          (1) DA operators shall disclose the risks in relation to the appraisal of their financial status, storage of clients’ assets, and clients’ risk management;
          (2) DA operators shall disclose information on the storage of digital assets with third-party custodians as well as the list of sourced exchanges;
          (3) Information disclosure and risk warnings according to (1) and (2) above shall be disseminated, at least through DA operators’ websites and applications (if any), communicated to all clients, and provided in the account opening process of new clients. In this regard, the information provided must be accurate, complete, up-to-date, and clearly separated from other information. In case of significant revisions/updates, all clients must be informed accordingly.

The notification was published in the Royal Gazette and came into force on 16 November 2023.

Remark: * The Notification of the Office of the Securities and Exchange Commission No. Sor Thor 17/2566 Re: Rules in Detail on Information Disclosure and Risk Warnings to Clients of Digital Asset Business Operators (https://publish.sec.or.th/nrs/9850s.pdf)