SEC, SET talking new ICO framework

SEC, SET talking new ICO framework

The Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) are discussing the establishment of a regulatory framework for funds raised from initial coin offerings (ICOs), with a public hearing expected to be concluded soon.

Once the regulatory framework is completed, the market regulator will forward it for consideration to the SEC's board of directors, said SEC secretary-general Rapee Sucharitakul.

The SEC has been gathering opinions from market participants and will push forward the issue to the SEC's board of directors to consider which direction the market regulator should take in managing ICOs and transactions, Mr Rapee said.

"The ICO issue requires a coherent national policy because it is a major issue," he said.

ICOs are expected to be raised as an issue when the SEC's board of directors reconvenes, with the issue likely to be discussed during the first quarter, Mr Rapee said.

He said the main reason ICOs must be considered at the policy level is because ICO fundraising has been growing at a rapid pace in many countries.

If these ICOs are not regulated, investors and related parties may doubt whether they are legitimate, inquiring about what regulations support this type of investment, Mr Rapee said.

ICOs are trendy because they can raise funds swiftly without requiring a financial statement, he said. The method is increasingly popular among tech startups, enterprises and investors.

ICO transactions are similar to crowdfunding, where an issuer presents a business model to investors, but the difference is that the raised funds are in the form of digital currencies using blockchain technology, and the deals are enforced using smart contracts.

Jaymart subsidiary J Ventures is poised to become the country's first SET-listed company to sell its own digital currency once it releases "JFin" through an ICO in March.

The company hopes to acquire 660 million baht in the first phase of the 100-million-coin ICO, with a price of US$0.20 (6.40 baht) per coin.

J Ventures plans to use the raised funds to develop a decentralised digital lending platform integrated with blockchain technology.

Earlier, SEC assistant secretary-general Praoporn Senanarong said raising funds from an ICO could be possible by next year's second quarter, with expectations that the new fundraising method poses a long-term disruptive risk to traditional financiers.

ICOs could replace initial public offerings in the long run, disrupting the traditional operations of asset management firms, investment banking, investment advisories, exchanges and brokers, Mrs Praoporn said.

The SEC has stipulated that the maximum investment for retail investors is capped at 300,000 baht per ICO project, with a total investment sum of 3 million baht per person.

Digital token issuers will be limited to raising up to 20 million baht in investment funds from retail investors per ICO project, with a maximum amount of 40 million for total ICO fundraising.

The SEC will also govern the ICO portal, which will be used to screen the ICO projects.

The ICO portal will disclose ICO white papers detailing the project's objectives, business model, business plan, use of proceeds, business milestones, legal risks, digital token functions, management and advisory.

ICO portals are required to have registered capital of 5 million baht.


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