Countries all across the world are warming up to the idea of crypto investments. The latest to join the bandwagon is Thailand, which has released a new, comprehensive regulatory framework for ICOs conducted on its shores. Along with ICOs, the laws also cover cryptocurrency trading pairs and licensing fees for market operators. The Thai government has also amended tax laws in order to extract revenue from the budding ICO space, along with fulfilling its prime responsibility of protecting investor money.
The ICO Regulations
The new ICO regulations actually reverse the ban imposed by the Thai government. According to the new Thai SEC decree, companies planning to launch ICOs have to furnish full details regarding the type of token being launched, along with other investment information. ICO portals have to look into their offerings for at least one year, while maintaining a base capital of 5 million baht (about US$157,000). All ICO projects will have to register with the SEC, within 90 days of the law taking effect, failing which they will be fined at least 500,000 baht (~US$15,703), with a probability of jail term of a maximum of 2 years.
The law has also placed restrictions on the amount of money that can be invested in ICOs. While institutional and high-net worth investors can put in unlimited funds into such projects, retail investors can invest up to 300,000 baht per person, per ICO; either that or a maximum of 70% of the total value of the token supply.
Approved Crypto Pairs and Licensing Fees
The Thai SEC has released a list of 7 cryptocurrencies that can be used as trading pairs. This includes Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Ripple, Litecoin and Stellar. The pairs have been chosen based on their immense liquidity reserves, convertibility to fiat currencies and comparative stability in the market. A rather interesting addition to the new laws is that every new token launched in the market has to be paired with at least one of these seven cryptocurrencies for trading.
All digital currency exchanges have to be registered within the country by August 14, 2018. The new regulations have outlined a detailed structure of licensing fees for market operators. Companies will have to pay registration fees of 5 million baht, which will cover the cost of both operations and token distribution. Centralised exchanges will have to keep a minimum capital of 50 million baht (US$1.57 million). For decentralised exchanges, the figure reaches 5 million baht. Brokers will have to maintain capital reserves of 10 million baht.
What Do These Changes Propose?
The Thai SEC has been granted power to regulate and oversee all cryptocurrency trading and transactions. Their primary purpose is to provide investor protection in a space riddled with scams and frauds. Nevertheless, they believe in the power of blockchain technology and want to encourage innovation.
The laws have been created on the grounds of striking a balance. As Archari Suppiroj, Director of the Thai SEC’s Fintech department, mentioned in a conference in Bangkok in July 2018, the purpose is not to get too strict with regulations, which will only fend off investors. The aim according to her is to keep in mind all those who consider the crypto space a bubble, as well as those who consider it a means for gambling.
Experts are, however, not too happy with the taxation part of these laws, which is contrary to Director Archari Suppiroj’s statements of encouraging investments. A 15% withholding tax will be levied on profits, which is rather inconvenient. In addition, 7% VAT was charged on trading of digital assets in the earlier tax code.
The good part is that companies will be required to share actual business plans and audited financial statements, which will give more confidence to investors. With such new laws and guidelines being enforced, mainstream adoption of cryptocurrencies isn’t a pipe dream anymore. From a country that had previously banned digital assets altogether, this is indeed a welcome change.