The two royal decrees regulating digital asset trade will be revised into a complete act, aiming to prevent any hurdles to startup development and facilitate a proper business ecosystem, says Deputy Prime Minister Wissanu Krea-ngam.
"We do not object to cryptocurrency trading, but we want [investors] to be informed [of the risks involved]," Mr Wissanu said during "Symposium Thailand 4.0: Fintech & Cryptocurrency vs Law Enforcement".
The government's previous intention was to draft an act to regulate digital asset trade, but such a process takes time and requires many details in the drafting procedure, hence the adoption of two emergency decrees, he told the symposium organised by Thammasat University's Faculty of Law.
Section 44 is not an appropriate tool to use in regulating digital assets, Mr Wissanu said, as such an invocation is reserved for purposes related to public assistance.
There are pros and cons associated with cryptocurrencies, including concerns related to money laundering and international terrorism finance, he said.
Thai Fintech Association president Jessada Sookdhis said that attempts to curb negative developments in cryptocurrencies and initial coin offerings (ICOs) will allow Thai tech startups to develop further.
If self-disruption is not initiated, foreign firms will eventually take control of domestic tech startups, Mr Jessada said.
After several rounds of public hearings, a royal decree regulating digital assets took effect on May 14. The 100-section document defines cryptocurrencies as digital assets and digital tokens.
All market participants, including ICO issuers, digital exchanges, brokers and dealers involved with digital asset transactions, are required to register with the SEC within 90 days of the effective date.
The participants must also receive the Finance Ministry's approval to conduct digital asset business.
According to the amended Revenue Code, individuals who gain and receive benefits from putting money into digital assets are subject to a 15% withholding tax.
But the Finance Ministry will waive the 7% value-added tax (VAT) for retail investors who trade cryptocurrencies and digital tokens through digital exchanges.
The ministry will issue ministerial regulations to impose a 15% withholding tax on capital gains and benefits from digital asset transactions for corporate entities.
Firms that make digital-asset-related trades will be liable for a 7% VAT payment from the transaction value, on top of the 15% withholding tax.
Bank of Thailand governor Veerathai Santiprabhob said there should be additional measures to regulate fintech businesses, as there are several new business models related to financial services that do not fall under any regulatory framework, such as digital platform businesses offering peer-to-peer lending services.
The distributed financial services framework of fintech demands collaboration from financial intermediaries issuing regulations that suitably supervise new businesses, Mr Veerathai said.
"Fintech is a part of economic and social development, so the central bank will consider regulating these business properly based on business risks," he said. "Fintech regulations will build up fairness of conducting financial business as a whole."
The central bank will consider issues associated with overall financial institution stability and consumer protection, as well as money laundering, terrorism finance, foreign exchange, taxation and cybersecurity.