Funds raising from initial coin offerings (ICOs) could be possible in next year's second quarter, with expectations the new fundraising method poses a long-term disruptive risk to traditional financiers, says the Securities and Exchange Commission (SEC).
ICOs could replace initial public offerings
Praoporn: ICOs are a global phenomenon
(IPOs) in the long run, disrupting the traditional operations of asset management firms, investment banking, investment advisories, exchanges and brokers, said SEC assistant secretary-general Praoporn Senanarong.
The method can be used to raise large sums from global financial markets, said Mrs Praoporn.
ICOs are also trendy because they can help raise funds swiftly without requiring a financial statement, she said.
The method is increasingly popular among tech startups, enterprises and investors.
ICO transactions are similar to crowdfunding, where an issuer presents a business model to investors, but the difference is the raised funds are in the form of digital currencies using blockchain technology, and the deals are enforced using smart contracts.
Mrs Praoporn said the SEC cannot block the coming of ICOs as their growth has jumped worldwide and there are parties in more than 90 countries who have invested in them.
Funds raised through ICOs as of the third quarter of 2017 totalled US$4 billion, a jump from around $200 million in the first quarter of 2015, according to the SEC.
The investment amount is also higher than that made in venture capital startups, which pulled in $300 million in the third quarter.
"[ICOs] are a global phenomenon so we cannot block this activity. They're also an evolution, whereby IPOs may be replaced by multi-ICOs in the future," said Mrs Praoporn.
"They will also disrupt investment banking, investment advisories, exchanges and brokers."
The SEC has also extended a public hearing on regulating ICOs to Jan 22, saying it will help related stakeholders fully participate in the public hearing process.
She said the SEC will differentiate legitimate ICOs from fraudulent ones and protect the fund-raising process properly, said Mrs Praoporn, adding that ICOs can help startups raise money from the general public.
"The SEC will allow [specific] groups of investors, including institutional investors, venture capitalists, private equity funds and ultra-high net worth investors [to invest in ICOs] with no investment limit," she said. "Retail investors will have limited investment amounts in case of losses."
Maximum investment for retail investors is capped at 300,000 baht per ICO project, with a total investment sum of 3 million per person.
Digital token issuers will be limited to raise investment funds from retail investors at no more than 20 million baht per ICO project, with a maximum amount of 40 million for total ICO fund-raising.
The SEC will also govern the ICO portal, which has a duty to screen ICO projects. The ICO portal needs to disclose ICO white papers comprising the project's objectives, business model and business plan, the use of proceeds, business milestones, legal risks, digital token functions, sales and mechanisms of digital tokens, management and advisory.
ICO portals are required to have registered capital of 5 million baht.