New Thailand’s SEC regulations
Thailand’s SEC opens public hearing relating to ICO portal regulations
On June 23, 2022, Thailand’s Securities and Exchange Commission (SEC) began a public hearing period which will focus on regulatory controls for initial coin offering (ICO) portals. The ICO portals in question are the ones that serve as financial advisors to digital token issuers. The proposed regulations from the SEC aim to prevent conflicts of interests arising; allow ICO portals to outsource certain functions; and establish additional notification obligations for ICO portals.
The public hearing is open for general comments until July 23, 2022. During this public hearing period, any interested parties can comment and provide feedback on the SEC’s proposed principles. The new legislation is expected to be issued by the SEC soon after the public hearing period ends.
- ICO portals who act as financial advisors to digital token issuers will soon be subject to new regulations from the SEC.
- The regulation will impose new obligations relating to conflicts of interest.
- ICO Portals will be allowed to outsource certain activities to 3rd parties.
- Ongoing notification requirements will be imposed upon ICO Portals.
What areas are the SEC focusing on?
The key proposed points are outlined below.
Conflicts of Interest
Under the new proposals from the SEC, ICO portals must be clear of conflicts of interest when representing issuers in any coin offerings. The draft regulation states that the following conflicts of interest are expressly prohibited:
- The ICO portal (and certain individuals as specified by the SEC) directly or indirectly holds a prohibited amount of shares in the issuer, its affiliates, or its subsidiaries. If the issuer is not a listed company, any shareholding or portion thereof is prohibited. If the issuer is a listed company on the Stock Exchange of Thailand (SET), the shares held by the ICO platform may not total more than five percent of the total voting rights.
- The issuer (and certain individuals as specified by the SEC) directly or indirectly holds shares in the ICO portal in any amount if the ICO portal is not a listed company, or totaling more than five percent of the voting rights if the ICO portal is listed on the SET.
- Any of the ICO portal’s directors or executives, or the head of the department responsible for screening the ICO project, is also a director in the issuer.
- The ICO portal has a relationship with, or any interest in, the issuer in a way that could impede the independence of the ICO portal with respect to conducting its duties.
Outsourcing ICO Portal Functions
The new regulations will allow ICO portals to outsource certain tasks. Any tasks which are outsourced are subject to the following conditions:
- The ICO portal must create and adopt an outsourcing policy, measures, and procedures (which must be approved by the board of directors). This policy must also be reviewed annually or if the policy will have a material impact on business operations.
- The scope of outsourced tasks must be appropriate, reasonable, and not so substantial that the ICO portal will become an entity with no business operations (an “empty box”).
- ICO portals may only outsource tasks relating to digital token offerings. Such tasks include; contacting and providing services to investors, and supporting digital token offerings and subscription management.
- Core tasks, like screening ICO projects, may not be outsourced.
- The ICO portal must notify the SEC within 15 days for the following actions. 1) when it outsources a task, 2) when there is a significant change to the outsourcing, 3) when the third party subcontracts any task to another party.
Additional Notification Obligations
ICO portals will also be required to notify the SEC within 15 days if there are any changes to their qualifications, personnel, and functions, or if the ICO portal is unable to maintain the necessary qualifications or comply with the requirements detailed in the relevant section of SEC Notification No. GorJor. 16/2561 Re: Criteria, Provisions, and Procedure for Approval of an ICO Portal Service Provider.
The notification must include information such as the cause and report on any remedial measures planned or already taken.
Should an ICO portal suspend its operations, it must also notify the SEC and provide a list of unfinished tasks along with how they plan to mitigate any potential impact on customers. Once this suspension has finished and the ICO portal wishes to resume operations, it must again notify the SEC, providing an explanation as to how it has resolved the issues that caused the suspension of operations, along with any significant changes to the portal’s characteristics.
The SEC is continuing to focus its efforts on digital assets and provide a clear and effective framework. This public hearing announcement has introduced an important set of rules and regulations for ICO Portals. However, the SEC appears to be open to feedback and is looking for contributions and suggestions from relevant parties. This is an excellent opportunity for relevant businesses to help shape these regulations.
If you are interested in learning more about how your business could get involved with blockchain related activities, why not book a consultation with our experts.
Please note that this article is for information purposes only and does not constitute legal advice.
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Frequently asked questions
Do you pay tax on crypto in Thailand?
The transfer of cryptocurrencies or digital tokens via a registered exchange in Thailand are now exempt from VAT (7%). This new legislation has been retroactively enforced from April 1st 2022, and will last until December 31st 2023.
Which country is tax free for cryptocurrency?
Examples include, Germany, Belarus, El Salvador, Portugal, Singapore, Malaysia. and Malta.
Is cryptocurrency legal in Thailand?
Yes Cryptocurrency is legal in Thailand. The Thai Government has been enacting and releasing legislation which is designed to create a legal framework for Cryptocurrencies in Thailand.
Is Binance legal in Thailand?
Binance has not been issued with the required licence from Thailands Security and Exchange Commission.
Does Thailand have capital gains tax?
Yes, Thailand has Capital Gains Tax and is set at a rate of 15%.
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