The Securities and Exchange Commission (SEC) and the Ministry of Finance (MOF) issued a new set of regulations regarding digital asset businesses (collectively, the “Notifications”). Key takeaways of the Notifications are (i) the designation of new types of digital asset businesses to be regulated under the Emergency Decree on Digital Asset Businesses B.E. 2561 (2018) (the “Digital Asset Decree”); and (ii) the specification of additional and revised requirements for digital asset business operators.
The Notifications designate the digital asset funds manager and the digital asset advisor as additional regulated digital asset businesses, in addition to the existing exchange, broker, and dealer businesses. The regulations also prescribe the regulatory framework for each business as follows:
The digital asset fund manager means a person who manages, or holds itself to the public as available to manage assets for other persons in order to seek benefit from digital assets in the normal course of business. The SEC is empowered to further specify digital asset fund manager with certain characteristics that will be exempted.
The types of digital assets in which the manager can invest for the benefit of the customers are:
- the digital assets legally issued and offered in Thailand; and
- the digital assets permitted or approved to be legally traded or exchanged in accordance with the law in other jurisdictions.
The Notifications prescribe several additional and revised requirements with which the digital asset business operators must comply.
The noteworthy ones include:
Digital asset business operators are required to keep no less than 90% of the total value of their customers’ assets in the cold wallet.
In the case where the total value of the customers’ assets is less than THB 15 million, the digital asset business operator can keep customers’ assets by itself (self-custody). The transfer of the customers’ assets can only be executed by a multi-signature of at least 2 non-family related authorized persons.
If the operator holds the customers’ assets in an amount of at least THB 15 million for a duration of 5 consecutive days, the operator must arrange to have a qualified third-party digital asset custodian to hold the customers’ assets for them within 45 days from the date of holding of such amount of assets. In such case, the business operators may still keep no more than 10% of the customers’ total assets in its own cold wallet.
Operating other businesses and change of important operational systems
Introducing Broker Agent (IBA)
Advertisement and promotion
Net Capital (NC) rules
Both the existing digital asset business operators and the new market entrants should ensure that these requirements are taken into account and duly complied with during their business operation in Thailand.
For more information, please contact our team at Baker McKenzie
Komkrit Kietduriyakul, Partner: [email protected]
Kullarat Phongsathaporn, Partner [email protected]
Thorroong Phatiwet, Associate [email protected]
Bheera Asawachinda, Associate [email protected]