SEC approves first ICO portal, still unnamed

SEC approves first ICO portal, still unnamed

Foreign firm chosen from pool of 7-8

The Securities and Exchange Commission's (SEC) board of directors have approved the first initial coin offering (ICO) portal and are likely to issue a criteria for applications for securities token offerings (STO) soon.

ICO portals help screen ICOs, conduct due diligence, prove smart contract source codes and verify the know-your-customer process.

Thailand's first authorised ICO portal is being finalised for official approval with the relevant government agencies such as the Commerce Ministry, said Archari Suppiroj, director of the fintech department at the SEC.

A foreign company is the operator of this authorised ICO portal, she said, without mentioning any names.

Roughly 7-8 companies conducted pre-consultations with the SEC to operate ICO portals, said Ms Archari.

"The first ICO deal will be available for public offering in the near future under the digital asset royal decree," she said.

Digitisation of other asset types, such as securities, to raise funds by launching an STO is prohibited as securities-related transactions fall under the purview of a different law, said Ms Archari.

Those interested in launching an STO need to apply for a licence as securities operations are supervised under the Securities and Exchange Act.

"In the future, the SEC will issue a criteria that allows companies to apply tokenisation to securities and other assets," she said.

"This will help bridge the digital asset royal decree and securities law."

In February, the National Legislative Assembly approved an amendment of the Securities and Exchange Act to support scripless securities issuance, whereby the securities depository centre is not limited to the Thailand Securities Depository (TSD), owned by the Stock Exchange of Thailand.

Once the amendment becomes effective, investors can deposit their assets at any securities depository centre licensed by the SEC.

"The next step is for an issuer to offer security tokens in the primary market," said Ms Archari.

The SEC will issue rules on depository centres and regulations to support tokenisation, as well as change the role of related parties such as financial advisers and underwriters.

The market regulator aims to create a level playing field for anyone who has profound knowledge of digitisation and tokenisation, together with the ability to become intermediaries for STOs, she said.

Ms Archari said the ICO market has started to graduate from project-based and intangible ideas to ICOs backed by physical assets such as real estate.

For investors, the key element for investment is knowledge and understanding, such as knowing the rights of an asset, risks and limitations, she said.

Jirayut Srupsrisopa, co-founder and chief executive at Bitkub Capital Group Holdings, said all assets can be digitised and tokenised with blockchain.

"We can trade property, diamonds, gold or even intellectual property with a T+0 settlement [period] on digital platforms," said Mr Jirayut.

"The market has high potential to grow because the law has been set."

Unlocking regulations to facilitate the growth of digital assets will open the doors for institutional investors, jump-starting future growth potential and scaling up investment impact, he said.

"Thailand has a supportive environment where lawyers and regulators understand the new global movement [on virtual asset classes]," said Mr Jirayut.

Some startups use blockchain in the asset digitisation process such as Everledger, a tech startup that offers an authentication platform to keep a single print of the reference number of diamonds and vintage wines to use as reference for trading, he said.

This is similar to a depository centre or register, such as TSD's operations for traditional securities trade.

"TSD or commercial banks, which have broad public trust, will be able to expand their businesses to other asset classes, including digital assets," said Mr Jirayut.

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