These are the series of quarterly regulatory updates in which Wise Equity Legal Counsel Limited aims to bring to your attention key developments of the relevant rules and regulations in the Thai capital markets and digital asset landscape. Here is our recap for the third quarter of 2024

1. Amendment of regulations related to supervision of ready-to-use utility tokens

• The Securities and Exchange Commission of Thailand (SEC) has issued a total of seven notifications, which have been effective since 13 August 2024, with a view to revamping its regulatory framework for ready-to-use utility tokens to ensure that the regulations align with the characteristics, risks, and usage of each type of utility token and to provide adequate and appropriate protection for the users without hindering the use of technologies in business and industrial sectors, the development of innovation, and the promotion of the national digital economy policy. Key revisions are as follows: –
  
  

• • Rules relating to Initial Coin Offering (ICO) : ready-to-use utility tokens that are issued for consumptive purposes or are a digital representation of a certificate (“Group 1 Tokens”), are exempt from the approval requirement prior to their offering, whilst utility tokens that are ready for use and fall outside of Group 1 Tokens (“Group 2 Tokens”), which are intended to be listed for trading on a licensed digital asset exchange, must be approved by the SEC prior to their offering and information of the offering must be disclosed via filing of a registration statement and a draft prospectus with the SEC Office. In addition, the offering must also be conducted through an ICO portal approved by the SEC. In addition, issuers of all types of utility tokens must not allow for tokens to be held for staking purpose, except for certain permitted staking, and the tokens offered must not constitute any Means of Payment (MOP) as defined by the Bank of Thailand (BOT).
    
    

• • Rules relating to the secondary market: operators who provide services related to Group 1 Tokens, whether or not they are ready-to-use, are not required to obtain any digital asset business license. However, digital asset exchanges, digital asset brokers, and digital asset dealers are prohibited from providing services related to such utility tokens and if these business operators wish to provide services related to Group 1 Token, whether or not they are ready-to-use, they must set up a distinct legal entity to provide such services. Furthermore, they must not use any names or information that could mislead the public into believing that they are engaged in a digital asset business under supervision of the SEC.

2. Amendment of regulations in relation to the qualifications of bondholder representatives

• The SEC has amended several regulations, which became effective from 16 August 2024, regarding the qualifications of bondholder representatives so as to better align with the current circumstances, to enhance readiness for business operation, and to provide more appropriate protection to investors. The revisions can be summarized as follows: –
  
  

• • A securities company that (i) are licensed to operate the securities brokerage business, the securities dealing business or the securities underwriting business and (ii) can provide services related to debt securities and Sukuk is eligible to act as a bondholder representative.       
    
    
  • A crowdfunding portal is eligible to act as a bondholder representative, but only for the debt securities for which it is the service provider.
    
    

• • A bondholder representative must have a paid-up registered capital of at least THB 25 million, a requirement that is intended safeguard clients’ interests.

3. Amendment of regulations in relation to the use of digital assets as an MOP and the BOT’s Programmable Payment Sandbox 

• During 2022, the Ministry of Finance (MOF), the SEC, and the BOT laid out policies and regulations for digital asset business operators where the use of digital assets as an MOP was discouraged. However, given the recent change in public policy on the same topic, the SEC and the SEC Office has each issued a notification, which has come into effect from 6 September 2024, to amend the rules prohibiting the use of digital assets as an MOP to include all current types of digital asset business operators and to allow digital asset business operators under the SEC’s supervision to participate in the BOT’s Programmable Payment Sandbox in order to promote the development of digital financial innovations. Material revisions are as follows: –
  
  

• • The scope of service provision is expanded to cover a new digital asset business operator, i.e., Digital Asset Custodial Wallet Provider.
     
  • Digital asset business operators that are approved by the BOT are allowed to participate in the BOT Sandbox.
    
    
  • The Cryptocurrency List as prescribed by the SEC is revised to allow ICO issuers, ICO portals and digital asset business operators to accept cryptocurrencies on the list in transactions or as compensation to accommodate the activities related to digital assets under the BOT Sandbox.

For more in depth information on any of the above, please reach out to Karinevidch Olivero at karinevidch.o@wiseequitylegal.com or Wisitchai Phasuk at wisitchai.p@wiseequitylegal.com.