Since July, the Securities and Exchange Commission of Thailand (SEC) has expressed its intention to legalize the ICO market and open it to start-up companies.
However, on December 1, 2018, the Securities and Exchange Commission of Thailand announced that the Thai-related Securities Token (STO) on the international market was illegal and stated that it would take a attempt to distribute STOs created in Thailand to overseas markets. Appropriate legal action.
According to reports, the Deputy Secretary of the Securities and Exchange Commission of Thailand, Tiedda Tavarala, said:
“Regulators will have to consider how to deal with STO to address issues such as equity, voting rights and dividends. Currently, we have not yet determined whether STO is part of the SEC Act or the Digital Assets Act, but it depends on the conditions of the STO and the details in the white paper.”
The government’s initial position to approve STO in the local market contradicts the plan of the Thai Securities and Exchange Commission to legalize ICO and allow companies to raise funds from public market investors.
According to reports, this month the Thai Securities and Exchange Commission approved the launch of the country's first ICO portal, and plans to approve the ICO project in the near future.
Archari Suppiroj, head of financial technology at the US Securities and Exchange Commission, said the launch of the ICO portal could lead to the approval of STO in the local market:
“The next step is to provide issuers of securities tokens in major markets.”
The importance of STO for foreign investment
Andreessen Horowitz, billionaire investor Peter Thiel and several major venture capital firms have funded security token projects over the past year, investing primarily in value-based security tokens with high liquidity and substitutability.
Harbour CEO Josh Stein raised $28 million from Andreessen Horowitz, saying that the company has not expressed negative feelings about well-structured security tokens with regulators and government agencies over the past few months.
He said that the main reason is that STO is a strictly regulated investment tool, fully in line with local regulations, and the government usually opens up the regulatory security token market.
Stein stressed the lack of legal boundaries between STO and global financial regulation. He said:
“There is a misconception that there are regulatory issues, or that regulations need to change. You need to comply with rules around the world, and if compliance does not work, nothing else will happen. We have already worked with some regulators in the US and around the world. I had a conversation. No one gave us negative feedback, and no one signed it, but our basic point is that we follow the rules."
The assets represented by STO are tangible real-world assets that can be approved by the authorities. Security tokens only provide cryptographic representations and proof of ownership, thereby increasing the liquidity and substitutability of physical assets.
Traditional assets (such as attributes and artwork) can be tokenized by an encrypted blockchain network, allowing investors to acquire ownership of certain assets by purchasing tokens.
Securities tokens allow investors to purchase a portion of an asset without having to fully acquire physical assets. One of the main reasons for cryptocurrency to attract millennials since the beginning of 2017 is that young investors can invest a small amount of money in digital assets. Real estate and many other physical assets are too high a threshold for young people.
Even if a security token is used in a complex transaction, the issuer can freeze the transaction of a security token asset at the request of the government. Although it can lead to administrative costs and reputational risks, if there is a problem, the government and security token operators can work together to create a physical version of the security token.
With no significant regulatory boundaries and significant advantages in liquidity, substitutability and transportability, investors involved in traditional financial industries, such as Hong Joon-ki, CEO of Cumberland Korea, an OTC cryptocurrency exchange, It is said that in the end, various assets such as art, real estate, sports teams and hedge funds will be tokenized:
“The global cryptocurrency sector will quickly turn into a security token at an exponential rate. Venture funds, hedge funds, sports teams, art, real estate and various real-world assets will be digitized on the blockchain. Currently, most are in institutions. Financial institutions entering the cryptocurrency industry with investor support are driven by the potential of tokenized assets and securities tokens, which are rapidly expanding their business by working with cryptocurrency researchers and blockchain technology startups."
Regulatory status in Thailand
Despite the changing trend of safe tokens and the increasing interest in tokenized assets in the global market, the current regulatory environment in the cryptocurrency market in Thailand is still insufficient to allow the distribution of regulated securities tokens less than three months ago.
In July, the Thai Securities and Exchange Commission officially legalized the registered ICO, allowing the company to sell tokens under the guidance of the US Securities and Exchange Commission. At the time, the Bangkok Post reported:
“The US Securities and Exchange Commission will allow seven types of cryptocurrencies for ICO to be traded as trading pairs. They are Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, Litecoin, Ripple and Stellar. All market participants, including ICO issuers, digital exchanges, brokers and traders involved in digital asset transactions must register with the SEC within 90 days of the effective date. Participants must also obtain approval from the Ministry of Finance for digital asset operations."
The implementation of a new policy on the legalization of regulated and registered ICO projects indicates that the Thai government is willing to promote the development of local cryptocurrency startups as long as their operations comply with current regulations.
More importantly, the decision of the Securities and Exchange Commission of Thailand to promote blockchain projects for ICO indicates that the government is interested in helping to lay the foundation for future ICO and STO projects.
Conceptually, a security token is similar to a registered ICO because both are cryptographic assets that operate under the direction of the Securities and Exchange Commission of Thailand, because only registered companies that comply with SEC standards can sell tokens and sales are limited to Recognized investor.
The Thai government’s openness to ICO may translate into an optimistic attitude towards security tokens, especially since security tokens pose less threat to public markets and government investors because the authorities can make security tokens relatively powerful. control.
According to the policy implemented by the Thai government since the beginning of 2018, the government's road map seems to start from the foundation and solve all major problems from the beginning.
In May, the Thai authorities abandoned the 7% tax rate on individual cryptocurrency investors, alleviating the pressure on investors investing in local digital asset trading platforms. In the following month, the Securities and Exchange Commission of Thailand issued a framework for legally registering ICO. Then, in August, the government approved seven cryptocurrency companies to operate legally in the country, officially granting them the ability to maintain operations without facing bank and regulatory issues.
If the government determines the cryptocurrency trading market, the basic issues of the ICO market and taxation are resolved and sufficient investor protection is applied, the government may turn its attention to emerging areas in the broader cryptocurrency sector, including securities tokens. .
Overall, Thailand continues to see some progress and changes in the local market in terms of regulation, adoption and growth. Eight months ago, ICO was completely banned in Thailand, whether or not it was registered.
With G2O's leading edge in cryptocurrency regulation, Thailand and other parts of Asia are expected to regulate their digital asset markets through more stringent policies, so the Thai government may eventually gain secure tokens.
However, in the short term, the Thai government is unlikely to allow retail investors or individual investors to participate in security tokens, especially in the United States, Japan and South Korea, any major initiatives to take security tokens during the period of not yet manufactured.
Value Security Token May Bring to Thailand
Although foreigners are not allowed to purchase land in Thailand, they can purchase apartments and obtain long-term land lease rights.
For foreign citizens buying apartments in Thailand, no matter what the value of the property, very little paperwork is required to prove the identity of the investor.
For such transactions, the security token simplifies the process of settlement payments and proves ownership through digital evidence that can exist in physical form.
Throughout 2018, Thailand has not been as aggressive as other major Asian economies (such as Singapore, Hong Kong and South Korea) to attract cryptocurrency startups and introduce talent to the blockchain industry. With a practical regulatory framework that allows for the creation of new industries in security tokens, Thailand can gain an edge in other cryptocurrencies in Asia.
For now, Thailand and its financial authorities may not be ready to legalize the distribution of legalized assets - at least for foreigners - and based on various factors, security token products may still be restricted in the short term. However, in the long run, Archari Suppiroj, director of the Securities and Exchange Commission of Thailand, hinted that Thailand may support STO.
The Thai government supports a blockchain-based remittance service provider, expressing its intention to promote blockchain and cryptocurrency-related business growth.