The Securities and Exchange Commission (SEC) plans to amend the royal decree on digital asset businesses next year, aiming to facilitate the growth of digital assets while protecting investors from unnecessary risk.
The regulator is studying whether the royal decree has any areas that are stumbling blocks to digital asset businesses, said Ruenvadee Suwanmongkol, secretary-general of the SEC.
"The regulator must be flexible to apply the rules and regulations in line with the market environment," she said. "For example, laws should not be outdated and should serve market needs, especially for new digital asset products, and be competitive with the global market. We need to explore any possible obstacles."
The royal decree took effect on May 14, 2018 and lists four types of secondary business intermediaries: digital exchanges, brokerage firms, dealers and token portal service providers, also known as initial coin offering (ICO) portals.
The royal decree covers cryptocurrencies, digital tokens and any other electronic data unit, as specified by the SEC. Exchanges, brokers and dealers are required to apply for licences from the Finance Ministry, while ICO portals must be approved by the SEC.
Ms Ruenvadee said many firms are keen to apply to become token digital issuers, but digital tokens and the ICO must be offered to the public through ICO portal companies and all three authorised by the SEC have not begun operations.
"The legislation also aims to protect investors from risk of fraud and deception by dishonest persons, money laundering and exploitation of digital assets to facilitate illegal financial transactions, while ensuring regulatory clarity to facilitate legitimate uses of digital assets," Rapee Sucharitakul, the former SEC secretary-general, said last year.
According to SEC data, five companies have been awarded digital asset exchange licences.
Among the five, Bitkub Online Co Ltd and Satang Pro Corporation are operating. Bitcoin Co decided to shut down its digital asset exchange in Thailand in August, and two other companies -- Bitherb Co Ltd (bitherb.net) and Huobi Thailand Co Ltd -- have yet to start operations.
For digital asset brokers, the SEC has authorised licences to three companies, Coin TH Co Ltd, bitherb.net and Bitazza Co Ltd. The latter two have not commercially launched services.
Coin TH Co Ltd is the sole digital asset dealer to win SEC approval.
The list of ICO portal companies already approved by the SEC includes three companies -- Longroot Thailand Co Ltd, T-BOX Thailand Co and SE Digital Company Ltd.
As per the royal decree, sellers of unauthorised digital tokens and those setting up unauthorised seminars to solicit cryptocurrency investment will be fined no more than twice the value of the digital transaction or at least 500,000 baht. They could also face a jail term of up to two years.
Investors who make digital asset-related trades will be liable for a 7% value-added tax (VAT) payment, on top of the 15% withholding tax on capital gains and returns from such investments.
Retail investors will be exempt from VAT if they trade digital assets through exchanges. Those who have no capital gains will only pay VAT. But investors will be required to pay VAT if their trades produce no capital gains.