Thailand Announces Prohibited Digital Tokens and Cryptocurrencies

Thailand’s Securities and Exchange Commission (SEC) has announced the prohibition of certain digital assets, preventing them from being traded on digital asset exchanges in Thailand. In principle, the SEC allows digital asset exchanges to set out their own criteria and processes for selecting and accepting the types of digital assets which they trade, and the Notification of the Securities and Exchange Commission No. Kor Thor. 18/2564 Re: Rules, Conditions and Procedures for Undertaking Digital Asset Businesses (No. 11), which took effect immediately upon its publication in the Government Gazette on June 11, 2021, is the first SEC regulation to restrict certain kinds of digital assets.

The regulation restricts digital asset exchanges from accepting any of the following digital tokens or cryptocurrencies:

• Meme tokens, defined as having no clear objective or underlying substance, with the price running on social media trends;
• Fan tokens, which are tokenized by famous online influencers;
• Non-fungible tokens (NFTs), defined as digital creations that declare ownership or grant of right in an object or specific right, and which are unique and not interchangeable with digital tokens of the same category and type at the equal amount; and
• Digital tokens issued by digital asset exchanges or related persons and utilized in a blockchain transaction (such as a blockchain’s native utility coin that is used to fuel, operate, and govern the chain ecosystem). “Related persons” in this context include:

1. 1. directors, executives, or controlling persons as defined under Section 39 of the Emergency Decree on Digital Asset Businesses B.E. 2561 (2018)—or their spouse or cohabiting partner;
   2. a juristic person controlled by one of these parties; and
   3. a parent company, subsidiary, or affiliated company in accordance with rules specified in an SEC notification.

The notification further prescribes that digital asset exchanges must set requirements for the trade of digital tokens issued by the exchange or related persons on the platform which it operates. Digital token issuers must comply with requirements in the white paper and relevant rules or the digital token may be delisted from the exchange. Digital asset exchanges must revise their listing rules and conditions by July 10, 2021.

The new notification will apply to all digital assets to be accepted for trading on an exchange from the effective date of the notification onward. Cryptocurrencies and digital tokens already accepted for trading on an exchange prior to that date will not be affected by the notification.

By Kobkit Thienpreecha and Nopparat Lalitkomon, Tilleke & Gibbins, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact thailand@transatlanticlaw.com

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