Thailand Takes Steps to Make Security Tokens Legal

March 7, 2019

Authorities in Thailand has moved to amend the Securities and Exchange Act to allow for the issuance and trading of blockchain-based securities in the Kingdom.

The legislative effort follows a wave of emerging local crypto ventures pending approval and is expected to form a more robust regulatory framework that will help advance the key role that the country currently occupies in the blockchain space.

Such amendments provide tokenization platforms with a means to operate legally and legitimately in the country, enabling private enterprises to serve as depositories for tokens and securities. The Thailand Securities Depository Co. Ltd. is currently the only local depository with the license to handle crypto assets in this way

Tipsuda Thavaramara, Deputy Secretary General of the Securities and Exchange Commission of Thailand, said the new Act will facilitate the local digital ecosystem, adding that it provides opportunities for new platforms.

Through the use of security tokens, nations are able to access the crypto space as safely as they would conventional markets. Security tokens in turn allow for the tokenization of any asset, as existing regulatory measures can be input immediately into the smart contract of a token.


The Thai approach to crypto

The Thai stance on crypto has not always been clearly defined. As recently as February 2018, crypto transactions were banned from financial institutions by the central bank, the Bank of Thailand, due to there being no existing regulatory framework in place. The country has since enacted stringent crypto legislation for unregistered brokers, including imposing heavy fines and jail time.

Nonetheless, the Thai crypto space continued to develop, even as anti-crypto sentiments prevailed among regulators. Authorities called for additional regulations in November 2018, especially for initial coin offerings (ICOs). The Thai SEC also issued warnings to 14 unauthorized crypto operators based in Thailand.

Regulatory measures for blockchain

Thailand today employs a progressive strategy with regard to blockchain regulations, and has seen notable returns as a result. With the introduction of security tokens into the blockchain sector, Thai authorities have paved the way for greater opportunities. The SEC granted four crypto operation licenses to applicants in January 2019, while denying two applications for reasons that were not disclosed.

The Stock Exchange of Thailand (SET) meanwhile announced plans during the same month to apply for a license to trade in digital assets, having launched a blockchain-based crowdfunding platform known as LiVE in May 2018 that enables startups to utilize peer-to-peer protocols for the purposes of acquiring new capital.

Describing the capabilities of the new exchange, Pattera Dilokrungthirapop, Vice Chairwoman of SET’s Board of Governors, said the platform will feature token storage via a digital wallet, together with a stable and robust technical system. SET aims to position its new platform in accordance with the growing demand for cryptos.

The future of Thai crypto

The relatively pro-crypto stance taken by Thai authorities has proven to be pragmatic, as the nation continues to move forward towards becoming a blockchain-friendly community. Future legislation is expected to create additional opportunities for blockchain-based investments in the region for the near and foreseeable future.

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