With a royal decree governing digital asset transactions taking effect Monday, companies and digital exchanges are preparing themselves to comply with the registration process, with an executive requesting the government establish an official digital exchange platform.
All market participants, including initial coin offering (ICO) issuers, digital exchanges and other relevant parties related to digital asset transactions, are required to register with the Securities and Exchange Commission (SEC) within 90 days from the effective date.
Digital asset transactions will also be subject to a 15% withholding tax on capital gains if there is a profit.
Sellers of digital tokens unauthorised by the SEC 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.
The Finance Ministry and the SEC will now work on organic laws requiring all digital asset transactions, including those of digital asset exchanges, brokers and dealers, to be registered with relevant authorities. The process is expected to take one month to complete.
J Ventures, a subsidiary of SET-listed Jay Mart Plc and issuer of JFin coin, will meet the SEC this Friday to discuss its compliance with the new regulations.
According to the company's internal analysis, there are 4-5 sections that the company should clarify with the regulator, such as filing the white paper and a section about insider trading, which is a criminal offence, said J Ventures chief executive Thanawat Lertwattanarak.
"If digital coins are considered to be similar to stocks, I will not give any figure or say something that could be deemed insider trading," said Mr Thanawat.
He will also talk to the SEC about the 100 million JFin tokens that have already been sold, as well as the 200 million tokens that could be sold in the future.
"If the government has the legal authority to curb digital fund-raising, they should have an organisation to help trading -- whether the country has an official digital exchange with high standards like the Stock Exchange of Thailand or Market for Alternative Investment or not," he said.
This could help token issuers and traders comply with the new regulations, said Mr Thanawat.
The company has already complied with the law by paying the value-added tax worth around 40 million baht in line with Revenue Department's interpretation, together with paying corporate income tax, he said.
Mr Thanawat said he wants JFin coins to be classified as securities to qualify for tax-free status.
According to the digital asset decree, digital exchanges are required to impose a 15% withholding tax on capital gains generated from digital asset transactions, but there are doubts whether such a tax will be imposed if a trader purchases a digital token from an overseas digital exchange and transfers it into a local one for sale, he said.
SEC technology adviser Bhume Bhumiratana said the SEC will provide a definition for some business activities included in this regulatory framework, such as points accumulated from credit card spending and mileage received from air travel.
"For ICO issuers which are currently raising funds in the domestic market, they have to be regulated under the new law, but for those raising funds in the global markets, they can continue the process," said Mr Bhume.
Concerns will be eased after everything becomes clearer, while the Revenue Department will provide greater details on the government tax policy, he said.
Regarding the 15% withholding tax, blockchain expert Jirayut Srupsrisopa said such a tax will increase the financial burden among traders, who may move to trade via online foreign exchanges and park their money in overseas bank accounts for a certain period before transferring their earnings to Thailand.
Additional reporting by Somruedi Banchongduang