Will the confusion finally end? Thailand’s SEC opts to transfer supervision of ICOs to Securities Act

Thailand’s Securities and Exchange Commission (SEC) is moving towards revising the regulatory regime surrounding ICOs so that they fall under the provisions of the Securities Act which, according to officials, will be amended to support the use of project-based investment tokens in the country. This proposed move comes in response to regulatory ambiguities caused by the fact that while project-based investment tokens and utility tokens are clearly defined under the Digital Asset Decree, security tokens issued via Security Token Offerings (STOs) and asset-backed investments still fall under a grey area, leaving many fundraisers in legal limbo.

Under this proposed move, security and utility tokens which cannot readily be exchanged for goods or services and possess considerable levels of risk for investors will be placed under the jurisdiction of the Securities and Exchange Act. This means that operators offering tokens that represent securities or are backed by certain assets listed in the Securities and Exchange Act will be subject to the same licensing requirements as securities that are outside the scope of digital assets, albeit under specific conditions once amendments have been introduced.

While definitive changes have yet to be announced by the SEC, it is expected that cryptocurrencies, utility tokens, and digital tokens that do not require fundraising will remain under the jurisdiction of the Digital Asset Decree. In doing this, the regulatory body hopes to provide further clarity to fundraisers to prevent potential issues surrounding compliance as well as to protect the interests of investors in Thailand who have taken a newfound interest in digital tokens following the meteoric rise of cryptocurrencies such as Bitcoin and Ethereum.

While the proposed move could put an end to the obscurities that currently exist under status quo, the SEC must be mindful of clearly distinguishing between the different types of offerings as well as the tokens associated with them given the functional differences between them. Moreover, the SEC should bear in mind the possibility of an overlap between ICOs and STOs by providing clear definitions or circumstances that would clearly categorize each token issuer according to their intended activities.

As this is an ongoing development, legal professionals in Silk Legal’s blockchain and technology practice are keeping vigilant for any possible updates in the matter and will provide updates accordingly. For any questions regarding Thailand’s laws surrounding ICOs, please contact us at [email protected] or using the contact form provided.