You have probably heard about FinTech. Unless you have been living on a deserted island talking to an imaginary friend named Wilson, which can actually happen from time-to-time in Thailand, you will know it is one of the hottest buzz phrases in startups and technology at the moment. Financial Technology “FinTech” comprises of technologies such as blockchain, crowdfunding, peer to peer (P2P) lending, e-wallets, robo advisors, digital platforms, m-commerce, financial analytics, payments, financial security and risk management just to name a few. What FinTech does is disrupts current business models to make experiences faster, easier and cheaper for consumers and business.
Unlike other technologies where companies are free to experiment and launch products with little or no regulation, FinTech by its nature comes under the watchful eye of regulators. In Thailand, the two main regulators are the Bank of Thailand “BOT” and the Securities and Exchange Commission “SEC”. Together, the BOT and SEC are implementing regulatory strategies that will govern these new business models.
As FinTech lawyers, Silk Legal has been assisting a variety of clients in determining ways forward to ensure that their business will be compliant with Thai law. We generally categorize FinTech ideas into one of five categories:
- Legal with no regulation – The business model is completely legal and does not come under any supervisory regulation. An example of this would be an analytic add on to give business better understanding of the data and it does not deal with the financial transaction itself.
- Legal with regulation – There is current regulations that the business model will need to comply with and licensing may be required. An example would be a company that is doing money exchange and complies with BOT regulations and has a license.
- Legal pending regulation – In certain areas, the BOT and SEC are currently drafting and have had open discussion on creating a regulatory environment. Most notably this would be the SEC’s new Crowdfunding regulations and the upcoming BOT’s Peer-to-Peer Lending regulations.
- Illegal – Sometimes people have a great idea, but it is just simply illegal. An example of this would be a crypto currency Ponzi scheme.
- Grey space – There are a variety of ideas and concepts that do not fit into any traditional category. Working with regulators and our legal team, we can determine if the concept is legally valid and find a way to make it happen.
Governments regulate financial markets and products for good reason, and it is exceptionally more important when dealing with retail consumers. It essential to get it right the first time, as the civil and criminal penalties are serious.
Silk Legal is on the forefront of advising FinTech in Thailand. If you are interested in learning more or how we can assist your FinTech business, please contact us at [email protected]