The Securities and Exchange Commission (SEC) on Friday announced supervision details for market participants involved in the digital asset trade, to come into effect later this month.
The details are deemed to be the digital asset decree’s organic law designed to regulate digital asset trade and transactions. The market regulator expects about 10 intermediaries to apply for operating licences.
Half of the intermediaries are expected to be cryptocurrency exchanges, with the rest identified as brokerage firms and dealers.
The SEC will allows seven cryptocurrencies, used for initial coin offerings (ICOs), to be traded as trading pairs. They are bitcoin, ethereum, bitcoin cash, ethereum classic, litecoin, ripple and stellar.
A trading pair refers to a trade between one type of cryptocurrency and another. Consensus credibility and cryptocurrency liquidity are some of the main criteria used by the SEC to assess cryptocurrency trading pairs.
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. 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.
SEC deputy secretary-general Tipsuda Thavaramara said the SEC’s regulatory scope includes ICOs, cryptocurrency exchanges, brokerage firms, dealers and other parties permitted by the Finance Ministry.
Digital token issuers must state clearly the type of tokens being issued, as well as investment information, in order to receive approval from the SEC.
Each ICO offering can be offered to institutional and ultra-high-net-worth investors at an unlimited investment amount, but investment is capped at 300,000 baht for retail investors per person and per ICO project, or no more than 70% of total value of offered tokens.
ICO portals are required to look after ICO offerings for at least a year, and ICO portals must have minimum registered capital of 5 million baht. For the licence fees, the Finance Ministry has a mandate for businesses involved with digital asset trade to be registered companies in Thailand. An upfront fee for digital exchanges is 5 million baht, which is separated into 2.5 million each for token distribution and cryptocurrency operations.
Fees charged for brokerage firms and digital asset dealers are 2.5 million and 2 million baht, respectively.
Annual fee for digital exchanges is charged at 0.002% of trading volume, with a minimum fee capped at 500,000 baht and 20 million for the maximum. Brokerage firms’ annual fee is charged at 0.001% of total trading volume, with the minimum fee capped at 250,000 baht and 5 million for the maximum.
Registered capital for digital exchanges is stipulated at 50 million baht for a centralised exchange and 25 million for brokers, while a decentralised exchange is at 10 million and a decentralised broker is at 5 million.
Brokers solely involved with sending trading orders are required to have 1 million baht worth of registered capital, while dealers are required to have 5 million in registered capital.
Digital exchange operators will have until Aug 14 to apply for licences.