Thailand’s Financial Regulator Announces a Regulatory Framework for ICOs

Siamak Masnavi

According to the Bangkok Post, Thailand's financial regulator, the Securities and Exchange Commission (SEC), has released a regulatory framework for issuing and selling tokens through initial coin offerings (ICOs) that will be effective from 16 July 2018.

When the Thai SEC held a focus group on cryptocurrency regulations on 21 May 2018, the hearing focused on fundraising through ICOs. The focus group decided that ICOs should only be allowed to raise funds through the national currency, the Thai Baht (THB), Bitcoin, Ether, and perhaps a few cryptocurrencies deemed to have "enough liquidity" and not associated with money laundering. ICO projects would also need to ensure that they are complying with KYC and AML rules. The ICO Portal of Thailand would not list any international ICOs. And finally, the Thai SEC would not get involved with ICOs for stablecoins, and regulations for these would instead be dealt with by the central bank, the Bank of Thailand (since there was no price volatility to worry about with stablecoins).

Here is a quick summary of the new guidelines:

  • An ICO's portal must be pre-approved by the Thai SEC.
  • ICO issuers must be Thai companies with a registered capital of at least 5 million bahts (around $150,000). The companies must have clear business plans and clear rights for digital token holders.
  • While there is no limit on how many tokens can be sold to an institutional investor, a venture capital firm, a private equity firm, or an ultra-high-net-worth (UHNWI) individuals, it is not allowed to sell more than 300,000 baht (around $9,000) worth of tokens for a single ICO to a single ordinary retail investor.
  • ICO issuers may only accept payments in Thai Baht or one of these seven cryptocurrencies: Bitcoin, Ether, XRP, Bitcoin Cash, Ethereum Classic, Stellar Lumens and Litecoin. 
  • An ICO's management structure and staff must be appropriate for business operations. 
  • An ICO is required to disclose its source code, investment prospectus, and financial statements.

Rapee Sucharitakul, the Secretary-General of the Thai SEC, made the following comment:

“The SEC is pleased to immediately discuss details with those who would like to be approved as ICO portals in order for them to be prepared for the regulatory framework. After the SEC approves an ICO portal, the token will be assessed for approval.”

 

Featured Image Credit: Photo by "Michael Rehfeldt" via Flickr; licensed under "CC BY 2.0"

Japan's Financial Regulator to Increase Oversight of Local Crypto Exchanges

Japan’s financial regulator, the Financial Services Agency (FSA), is reportedly planning to closely monitor cryptocurrency transactions due to heightened concerns regarding their use in financing illicit activities.

According to the Nikkei Asian Review, the FSA is “stepping up its countermeasures” in order to prevent money laundering. The countermeasures include conducting more extensive inspections of the operations of local cryptoasset exchanges.

Intergovernmental Body To Monitor FSA’s Progress

As confirmed by local sources, a Japanese intergovernmental body will be inspecting the FSA’s ongoing efforts and overall progress made in preventing or reducing money laundering activities in the $5 trillion economy. Financial crimes involving cryptocurrencies will also be discussed during the upcoming G-20 meeting.

At present, the FSA is inspecting the business operations of local exchanges, in order to ensure that they’re adhering to appropriate know-your-customer (KYC) and anti-money laundering (AML) policies. The Japanese regulatory authority is also looking more closely into the day-to-day operations of traditional financial institutions to ensure they’re complying with the relevant guidelines.

$571 Million In Crypto Allegedly Stolen From Asian Exchanges

In March 2019, the UN Security Council received reports from cybersecurity professionals which revealed that North Korea had allegedly orchestrated various cyberattacks in order to steal large amounts of cryptocurrency.

The security reports revealed that Asian (including Japanese) digital asset exchanges lost as much as $571 million in cryptocurrency due to at least five different large-scale security breaches. Cybersecurity researchers believes the hacks were carried out by malicious actors based in North Korea.

Evading Sanctions By Using Cryptocurrencies

In statements shared with the UN Security Council (in March 2019), the panel of internet security experts noted:

Cyberattacks involving cryptocurrencies provide the Democratic People's Republic of Korea with more ways to evade sanctions given that they are harder to trace, can be laundered many times and are independent from government regulation.

In April 2017, Japan became the world’s first country to propose a new type of registration system for digital asset exchanges. Prior to its introduction, there were no clear set of laws or guidelines that crypto trading platforms were required to follow.

In late January 2018, Japanese crypto exchange Coincheck was hacked and over $500 million worth of NEM (XEM) tokens were stolen. Due to the damaging security breach, Coincheck’s operations were severely affected as it was forced to suspend trading on its platform for several months. Although Coincheck went through an acquisition and various measures were taken to improve its security, the exchange has not managed to fully recover from the incident.