Hi, This is Qadir A.K, Crypto lover, and Research Columnist.
With the emergence of the Cryptocurrency Industry to different corners of the world, every jurisdiction is making efforts to handle the Cryptocurrency into their financial system. There have been Updates, amendments and introductions happening around and this article aims to dissect the regulatory setup of Thailand.
Welcome to the new Chapter of my writing series “The Cryptocurrency Law Breakthrough 2020 – Part 19 : Cryptocurrency Regulations in Thailand”
The growth of cryptocurrency in Thailand is booming and all thanks to the flourishing blockchain industry. Thailand is the second-largest economy in Asia in terms of G.D.P and tops with the number of people using mobile banking. Almost 10% of internet users own cryptocurrencies with a broad range of age groups between 16 – 64, this is a very high Cryptocurrency ownership ratio as of 2020.
Cryptocurrency in Thailand
Thailand has always had a proactive approach in regulating the offering of digital assets and opening its doors to crypto-related businesses. Thailand has adopted a more liberal and progressive stand towards cryptocurrencies by approving four cryptocurrencies for ICO tradings.
However, the government has clarified approval does not mean that these currencies can be used to pay off debts.
It was May 14 2018 when Cryptocurrency and ICO’s were added into the law amendments and by September 2018 7 cryptocurrencies were approved by the SEC body and as of Jun 4 2020 Thailand decides to approve and keep only 4 of them Bitcoim( BC), Ripple ( XRP) , Ehtereum( ETH) and Stellar ( XLM).
SInce the Implementation of new laws from 2018, there was no growth seen in the Cryptocurrency and ICO’s , the reports show that there were only 5 companies approved and only 2 of them were launched.
Followed by the poor performance reports, the SEC Planned to make amendments in 2020 and go forwards. We can see some of the updates happening in series and this may continue by the end of 2020.
In 2019, the National Electronics and Computer Training Centre (NECTEC) of Thailand developed blockchain technology for e-voting which can be applied in the national or provincial or any elections.
A positive and supportive attitude of Thailand towards emerging technology, attracts promoters from all around the world promoting the overall growth of the blockchain industry. In this way, the country will be ready for widespread adoption of the cryptocurrency.
In January 2020, the SEC started issuing licenses to companies that existed before the last regulatory update in may 2019 . As of today, Thailand has only 4 approved cryptocurrency exchanges and one crypto broker platform.
Government’s Regulations on Crypto’s
The Securities and Exchange Commission (SEC) is the regulatory body in Thailand. Ruenvadee Suwanmongkol, secretary-general of the SEC said,
“The regulators are doing their best to adapt to the fast-changing pace of digital assets market needs and making sure that the laws are in line with the current and future market environment. We are in the process of removing any likely hurdles and closing loopholes,”
Recently, the Thai Government’s Fiscal Policy Office has published a new set of rules entitled ‘Rules, Conditions, and Procedures for Digital Asset Business’ which was implemented on Jan 01, 2020. According to the rules,
- The issuer must obtain approval by submitting a registration statement and draft prospectus.
- The operators holding customer assets must maintain daily liquidity capital of a minimum 15 million baht (~$ 485,572) and at least 5% of customer’s asset value.
- Digital asset exchanges that do not hold customer’s assets must maintain the capital of at least $5 million.
Heavy fines of at least two times the token value up to 500,000 baht and penalties of imprisonment of two to five years have been imposed in case found guilty of noncompliance with the laws framed.
Thailand has also enacted two royal decrees, which is the order given, which imposes a tax on the income derived from cryptocurrencies.
- Royal Decree of the Amendment to the Revenue Code
- Royal Decree on the Digital Asset Business B.E. 2561
Taxation and Mining
Taxes on Cryptocurrencies
Thailand’s Revenue Department considers cryptocurrencies as intangible assets. The companies involved in crypto transactions are liable to pay Capital gains tax of 20% on the profit. Whereas, the individuals are also liable to pay Progressive Income Tax of 35% on their profit,
The transfer of virtual currency from a wallet, address, or account to another wallet of the same person and all the cross border transactions are not a taxable event.
Mining of Cryptocurrencies
Mining of cryptocurrencies is not restricted in Thailand. But any Bitcoin bought or sold in Thailand cannot touch foreign currency transactions.
In this scenario, Bitcoin use could be illegal. However, Thailand’s Revenue Department has not provided any guidance on mining taxation yet.
Series of Events
20-01-2020:- ERX and Zipmex get licensed from Thailand SEC as a digital asset exchange.
19-12-2019:- Public hearing was held with the number Kor.Thor.44/2562 regarding the rules and regulations for digital asset operators and system providers offering digital token.
19-07-2019:- The digital asset exchange will be required to report digital asset trades with a value exceeding 5 million THB to commercial banks, then the banks must report such transactions to AMLO.
07-06-2019:- SEC announced on Private Placements of digital assets providing advice and guidance on the offering of digital Assets by
- Registration statement and prospectus for retail customers or
- In a private placement to institutional investors, ultra-high net worth individuals etc
01-03-2019:- The SEC seeks public comments on the proposed rules for data submission by digital asset business (DAB) operators and initial coin offering (ICO) portals.
04-08-2018:- The Bank of Thailand permitted banks to set up branches that may issue tokens, invest in cryptocurrencies and run crypto-related business.
05-07-2018:- Thailand’s financial market regulator framed new rules governing ICO’s which was implemented on July 16
02-07-2018:- The Association of Securities Companies(ASCO) studied the possibility of establishing a joint cryptocurrency exchange between securities companies and also planned to apply for a licence from SEC.
14-05-2018:– The Digital Asset Management Act BE 2561 was enacted which granted SEC with the authority to regulate digital assets with three categories,
- ICO portals
14-03-2018:- The Cabinet of Thailand approved the draft of two royal decrees that would regulate digital transactions and would impose taxes on digital assets.
27-10-2017:- The Securities and Exchange Commission Thailand (SEC Thailand) issued a public Consultation document mentioning its regulatory approach on ICO.
18-08-2014:- A senior director of Bank of Thailand said that companies dealing with cryptocurrencies in exchange with baht does not require an operating license. Only the foreign currency trades would be required to obtain a license.
20-02-2014:- Bank of Thailand concluded that Thai law does not regulate virtual currencies and the exchanges cannot exchange virtual currencies for any other foreign currency other than baht.
20-07-2013:- Bank of Thailand in a meeting with a bitcoin company said that there are no specific regulations or laws for the digital currencies and buying or selling cryptocurrencies or any other activities involving cryptocurrencies is illegal.
Thailand has provided the blockchain and the cryptocurrency a friendly platform to develop and come out with new innovations. Thailand has also regulated the cryptocurrencies by implementing laws and taxes on the profits. Hence, the positive approach of the government would surely result in the immense growth of technology in the country and give a boost to the economy.