It is true that the general concept of cryptocurrencies doesn’t have the space for third-party intermediary – like banks or regulator; there seems to be a global consensus (at least in regulatory and decision-making circles) that fundamental regulatory guidelines are vital. They are meant to help the industry grow, educate participants on scams, and protect investors from any fraud.
Having said that, the number of countries and regulators inching towards the legal frameworks is growing, and the latest example is Thailand. Until Monday, there were speculations that the country may follow the Chinese example and completely ban the cryptocurrencies, token sales, and related business practices. It didn’t happen – a good news for the market.
The regulatory guidelines (The Digital Asset Management Act BE 2561) for cryptocurrencies and initial coin offerings (ICO) went into effect on Monday. They also included a revised tax code – with an addition of crypto taxation. If the sellers of digital tokens do not get registered with the regulator within 90 days; they may face fines, jail, or both. It is pertinent to note that the DAM Act was approved by the Thai cabinet in March, but was held back for amendments.
As per the new rules, both cryptocurrencies and digital tokens (like those issued via ICOs) are considered digital assets. They also include a revision of the “Revenue Code No. 19” in order to tax the cryptocurrency profits at 15 percent.
According to the Finance Minister: It [the decree] was not meant to prohibit cryptocurrencies, initial coin offerings (ICOs) and other digital asset-related transactions, but to protect investors.”
This brings a lot more credibility and legitimacy to the industry and is seen as an important step towards making cryptocurrencies and ICO more appealing for the public and investors. While exact impact of the new regulation is yet to be seen, the general response is positive.
The Role of SEC:
The decree outlines four key duties for the country’s Securities and Exchange Commission (SEC) with regards to regulating the currencies and operators.
- To regulate the issuance and offering of cryptocurrencies and digital asset businesses.
- To set the fees and requirements for the registration and approval of cryptocurrencies and their operators.
- To establish a guideline for dealing with potential issues and their fixes.
- To cover those areas not duely covered in details.
The regulation also suggests heavy fines and punishment for the people and organizations who fail to comply with the guidelines.
According to the publication:
“Sellers of digital tokens unauthorized by the SEC will be fined no more than twice the value of the digital transaction or at least 500,000 baht [~US$15,703]. They could also face a jail term of up to two years.”
In the next stage, the regulator will work with the finance ministry on organic laws requiring registration of all digital asset transactions with the authority. Interestingly, country’s central bank – the Bank of Thailand has recommended banks to wait until the SEC announces detailed regulation about every transaction and asset. Previously, it has banned all crypto-related banking activities and trading.