Experts throw weight behind SEC to handle digital assets

Experts throw weight behind SEC to handle digital assets

Korn: ICOs have benefits for SMEs
Korn: ICOs have benefits for SMEs

The Securities and Exchange Commission (SEC) has received endorsement from financial experts to regulate all aspects of digital assets and virtual fund-raising when a royal decree is enacted to that effect.

The Thai Fintech Association (TFA) supports the SEC in regulating all types of digital assets because the market regulator has been monitoring these developments and is equipped with a better understanding of this fund-raising method than other public organisations, said TFA chairman Korn Chatikavanij.

Mr Korn, a former finance minister, said the TFA has consulted and cooperated with the SEC, the Bank of Thailand and the Finance Ministry, arguing that Thailand should have proper rules and regulations to supervise all types of digital assets to reduce investment risks.

"I agree with the Finance Ministry's [view] of letting the SEC be the only organisation governing digital assets, because it already oversees securities and has a profound understanding of digital assets," he said.

"Digital assets are new for everyone, and no one knows everything [about them], so all parties should be open-minded, learn about them and have proper rules and regulations."

Initial coin offerings (ICOs) have benefits for small businesses in terms of fund-raising, therefore the regulations should not be too stringent or this will be a barrier to fund-raising, Mr Korn said.

He compared ICOs to past initial public offerings (IPOs), as the Stock Exchange of Thailand was established almost two decades before the SEC, resulting in a learning curve among market participants because no securities regulations were in place.

Since ICOs have greater investment risk than stocks, education for all market participants is essential, Mr Korn said.

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

Public hearings on the ICO regulatory framework, drafted by the SEC, recently completed their last round on Jan 22 after being extended twice.

Most of the market participants have agreed with the SEC on regulating ICOs through an "investment participation" track.

The track requires ICOs to be done through an ICO portal, which must originate in Thailand with minimum registered capital of up to 5 million baht.

But market participants have different opinions about the limitations imposed on retail investors and ICOs.

The TFA and the Finance Ministry have said that the Bank of Thailand should consider using a digital coin as a medium for digital payment transactions without relying on commercial banks, Mr Korn said, adding that the Finance Ministry has instructed the central bank to study the issue.

Rapee Sucharitakul, secretary-general at the SEC, said the regulator's board of directors did not meet to consider a regulatory framework on digital assets and initial coin offerings (ICOs) Thursday, since it had already been agreed at Wednesday's meeting between Deputy Prime Minister Wissanu Krea-ngam, Finance Minister Apisak Tantivorawong and related agencies that a royal decree should be enacted to empower the SEC to regulate all aspects of digital assets.

This special decree will encompass every dimension of regulating digital assets, such as ICOs and cryptocurrencies, together with setting up a regulatory framework for businesses opting to raise funds via ICOs, businesses acting as platforms for ICO trading in the secondary market and establishing investor criteria, Mr Rapee said.

The SEC's board of directors will hold a meeting to consider all details once such a royal decree is enacted, which they anticipate will happen soon because of the priority status of the issue, he said.

Earlier, it was reported that the SEC's board of directors would review the ICO regulatory framework on March 8 after the public hearings on a draft bill regarding ICOs were completed.

Bank of Thailand governor Veerathai Santiprabhob said Wednesday's meeting of state agencies and financial regulators resulted in an agreement to enact a new law to comprehensively regulate digital currencies.

He referred to Deputy Prime Minister Somkid Jatusripitak's remarks that the new law is expected to be finalised in a month's time.

The regulatory framework will cover cryptocurrencies in several areas, including investor protections and how cryptocurrencies have sometimes been used as a medium for money-laundering, tax avoidance and Ponzi schemes, Mr Veerathai said.

Adisak Sukhumvitaya, chief executive of Jay Mart Plc, said the upcoming ICO regulatory framework will not affect the JFin ICO.

Jay Mart's subsidiary, J Ventures, has created 300 million digital tokens, having sold 100 million during the pre-sale period in February. The price of JFin coin is set at US$0.20 (six baht) per coin.

The company does not yet plan to sell the remaining 200 million JFin coins, but it will comply with all related conditions of the upcoming ICO regulations, Mr Adisak said.

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