Thailand to Legalize Tokenized Securities

By Katelyn James | February 25, 2019
Thailand to Legalize Tokenized Securities

Thailand’s National Legislative Assembly has passed (Feb 8) a key amendment to the country’s Securities and Exchange Act (SEA), setting the stage for the legal introduction of tokenized securities, as well as further liberalization of its overall securities market such as issuing scripless securities.  

Major local daily Bangkok Post reported (Feb 22) Tipsuda Thavaramara, Deputy Secretary-General of the Securities and Exchange Commission (SEC), as explaining SEC had amended the act “to serve the tokenization platform in the future and will build up the digital asset ecosystem”.

“Implementation of the tokenization platform is expected to become effective this year,” she added.

To open up the market, SEC will allow operators of securities depositories and digital tokens to apply for depository licenses. Previously, only Thailand Securities Depository, an SEC subsidiary, was allowed to serve as a scripless securities depository.

Tipsuda also said SEC aims to free up some traditional operating systems to further boost market efficiency.

For example, following the legislative amendment subscription sales for initial public offerings (IPOs), initial coin offerings (ICOs), and security token offerings (STOs) in Thailand’s primary market will be based on scripless issuance.

Once the amendment is in effect, businesses will be able to offer blockchain-based security token offerings (STOs) under the securities law, said SEC Director of Corporate Communications Pariya Techamuanvivit.

However, whether an STO will be regulated under the SEA or the digital asset royal decree will depend on its features – such as the rights and obligations connected with that token – Pariya explained. He added that SEC can provide assistance to help differentiate which securities can be issued as digital tokens.

Licensed crypto exchanges, brokers, dealers, and recognized ICO portals must also apply for a license if they wish to provide STO-related services.

Thailand has been proactive in addressing how it intends to handle cryptocurrencies and blockchain use. In July last year, crypto media reported that Thailand had decided how it would officially define digital assets, whether as currencies or securities. While many other countries might still be resolving the debate for themselves, Thailand has come to recognize them as being both – depending on the purpose they are intended for.

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