On July 16, the Thailand Securities and Exchange Commission (SEC) will put new rules on ICO licensing into effect. According to their announcement, ICOs will be allowed to operate in a regulated environment.
Any company that wishes to launch an ICO in Thailand must file an application with the SEC. Upon approval, they will be able to do business. What makes the Thailand ruling unique is that they are also allowing “ICO portals” to submit applications on behalf of the individual ICOs they list. Presumably, this will make the SEC’s job more efficient as ICOs would be pre-screened, while putting the onus on the various exchanges to self-police the market by empowering them to decide which ICOs are worthy of the risk and costs involved.
This new licensing rule came about after many months of public hearings and legislative debates. As we previously reported, the Thailand SEC was expected to approve five out of 50 ICOs in June, under a new regulatory framework. These approvals were to be contingent on the new licensing rule, as per the royal decree to regulate the industry on May 14. At that time, a 100-section document was released to categorize digital assets. Such documentation may be utilized by the exchanges and ICO portals to inform their decisions on which projects to submit for approval.
In addition to the licensure requirements, the Thailand SEC put limits on the amount that different classes of investors may put into ICOs and other digital assets. Institutional investors and extremely high net-worth individuals would have no limits, while retail investors are now capped at 300,000 baht, or about $9,315 USD. In addition, the SEC expects a minimum of 30% of the investors in any ICO to be institutional or high net-worth, sophisticated investors.
ICO portal applicants must be registered businesses in Thailand, with a minimum of 5 million baht ($150,000) in capital reserves. They must also show that they have the proper resources for evaluating ICOs in terms of business plans, code, and other details that you might expect to find in a project’s white paper and website.
In addition to fiat transactions, the Thailand SEC has approved seven cryptocurrencies to be used in ICO purchases and other token sales, including Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Ripple and Stellar Lumens.
ICO issuers must also be incorporated under Thai law, with a clear business plan and other requirements for licensure. They must disclose their source code according to the Data Entry Form Draft prospectus, and they must be offered to institutional investors.
According to Mr. Rapee Sucharitakul, Secretary General of the Thailand SEC, “The SEC welcomes the request for an ICO portal.” He encourages companies to discuss the process with the SEC in detail, in order to prepare for the application process, to make sure that all requirements are met. He also states that as ICOs are approved, the screening process will be improved, to prevent deception. He also suggests that most fundraising projects will result in a loss for the investor, meaning that institutions and high net-worth investors would be in a better place to accept the risk involved.
Further information about the Digital Asset Capitalization Act may be downloaded here.