SEC supervision of ICOs considered

SEC supervision of ICOs considered

Finance Ministry working on controlling digital assets and disruption

Representatives from the Stock Exchange of Thailand, the Thai Bankers' Association and the Federation of Thai Capital Market Organizations attend the launch of the SET's T+2 settlement cycle.
Representatives from the Stock Exchange of Thailand, the Thai Bankers' Association and the Federation of Thai Capital Market Organizations attend the launch of the SET's T+2 settlement cycle.

The Finance Ministry is considering the appointment of the Securities and Exchange Commission (SEC) to supervise fund-raising involving initial coin offerings (ICOs) and digital assets.

If the plan bears fruit, the SEC's authority will cover digital assets beyond securities such as digital tokens, for which the market regulator already has supervisory authority granted under the SEC Act.

SEC deputy secretary-general Tipsuda Thavaramara said the commission's board of directors will meet next Thursday to consider the ICO regulatory framework and related fund-raising through digital tokens.

"If the SEC board accepts and approves ICO rules and regulations for securities ICOs, then the SEC is expected to announce an official effective date this month," Mrs Tipsuda said.

She said the Finance Ministry has asked the SEC to look after all types of digital assets and ICOs, but the SEC recently conducted a public hearing on securities ICOs, while public hearings on regulating other types of digital assets have not been held yet.

An ICO classified under securities could be the first class of digital assets supervised by the SEC, as such securities fall under the market regulator's SEC Act authority.

ICO returns could be in the form of a utility such as a coupon used to buy products or services, the right to own a specific asset or the right to receive revenue or profit-sharing without engaging in day-to-day operations, according to the SEC.

Kesara Manchusree, president of the Stock Exchange of Thailand, said some listed firms have informed the bourse of plans to launch ICOs.

Although the SET has no duty to allow or approve ICO fund-raising projects, the bourse can request that firms provide information on ICOs and details related to their white papers.

A white paper is similar to the prospectus of an IPO, detailing the project's objectives, business model, business plan, use of proceeds, business milestones, legal risks, digital token functions, management and advisory.

"However, listed firms should carefully consider raising funds from ICOs," Mrs Kesara said. "If they want to sell [digital tokens], they must act transparently, and in the event of scams or fraud, the judicial process will fall under criminal law.

"We recognise that we do not have a monopoly over exchanges. The growth of the SET in the past was supported by cooperation with other related organisations in Thailand such as the Bank of Thailand, the Finance Ministry and others."

Competition in the future will come from other global trading platforms, whereby firms can use new technologies such as blockchain or electronic trading platforms and cut out intermediaries from the trading system, Mrs Kesara said.

The SET plans to manage competition derived from changes in global technology by increasing working efficiency, IT system development and new products, together with expanding cooperation with other exchanges, she said.

In related news, the SET yesterday officially launched the T+2 clearing and settlement system, aligning with practices adopted by stock exchanges in Europe and the US.

In Asia, T+2 is executed in Taiwan and South Korea, while Indonesia and the Philippines aim to launch the system by year-end.

Elsewhere, Japan, Australia and Singapore have announced plans to launch this clearing and settlement system next year.

"We are certain that T+2 will benefit all stakeholders, not only in reducing the risks and costs, but improving convenience for cross-border portfolio investment," Mrs Kesara said.

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