Thailand’s Royal Decree to Regulate Cryptos

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Thailand’s Central Bank Governor Veerathai Santiprabhob is seen during an interview with Reuters at the Bank of Thailand headquarters in Bangkok, Thailand March 14, 2018. REUTERS/Jorge Silva

The “Decree on the Digital Asset Business 2018” (Decree), came into force on 14th May 2018. The royal decree which composes of 100 sections, defines cryptocurrency as “digital tokens” and “digital assets”. The law tasks the Thai Security Exchange Commission (TSEC) to control and regulate digital assets.

Founders of crypto based business will henceforth be required to seek approval of the ministry of Finance, abide by the rules set by SEC which among others includes having adequate capital, measures to ensure cyber security, KYC and Customer Due Diligence (CDD) and AML measures

All sellers are by law required to register with TSEC in 90 days after the Decree has taken effect.  Traders of digital tokens that are not authorized by TSEC, may face a jail sentence of up to two years or/and a fine of up to twice the value of the unauthorized digital transaction, or at least 500,000 baht (about $15,700). Traders who permit others to carry out transactions can be fined up to $3,141 and jailed up to one year.

The law was set to protect investors but not to ban Initial Coin Offerings (ICOs), cryptocurrencies and other digital asset-related transactions. The aim of the Decree is to prevent the use of cryptocurrencies for criminal activities, money laundering and tax avoidance.

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.”

The Thai Finance Ministry and TSEC are in the process of expanding the framework and required all domestic crypto exchanges, as well as independent crypto brokers and dealers, to register with relevant authorities as stipulated by the Decree.

Flavio Cultrera and Ahmed Ali

Diacle