Thailand's SEC Issues ICO Guidance
On September 14, 2017, the Thai Securities and Exchange Commission (SEC) published its viewpoint on token offerings (ICOs). Some digital assets may be subject to securities laws, the regulator explained.
“Since the digital tokens can diverge widely in design and representation, some may resemble financial returns, rights and obligations in similar ways to securities under the Securities and Exchange Act.”
The regulator’s observations closely parallel those of the US SEC. In July 2017, the American agency published a notice that “securities laws may apply to offers, sales, and trading of interests in virtual organizations.” Essentially, when a token functions similarly to a share in a company, regulators might step in to ensure that issuing companies abide by relevant legal standards.
As token offerings have increased in popularity, the Thai SEC also expressed concern that the fundraising mechanism might be abused by fraudsters or scam artists. Other regulators that have given public warnings about ICOs include the UK’s Financial Conduct Authority, the Canadian Securities Administrators, and Dubai’s Financial Services Authority. Last week, the People’s Bank of China forbade ICOs altogether.
By contrast, the Thai SEC’s prudent attitude seems more similar to that of Japan’s Financial Services Agency. In Japan, the FSA has patiently monitored the cryptocurrency market rather than stifled its development. Likewise, The Thai agency wrote that it “understands the unique environment in which tech startups operate and realizes that ICO[s] may not yet fit neatly with SEC Thailand’s current regulatory framework.”
This measured approach should come as no surprise as the Thai government has generally welcomed blockchain technology. In mid-August, the Central Bank of Thailand met with representatives from OmiseGo, an Ethereum-based financial services company. And, in the public sector, the nation’s postal service and the State Railway of Thailand are reportedly considering some form of blockchain implementation.