Thailand Set to Implement Crypto Regulations by 2024

Cryptocurrency has completely transformed the global financial landscape, prompting governments around the world to keep up with the latest updates and implement regulatory frameworks to monitor the cryptocurrency market. Thailand, known for its growing crypto market, has been at the forefront of adopting regulations for cryptocurrencies.

Introduction
Thailand has been an early adopter of regulatory frameworks for cryptocurrencies, making it a country that others look up to. In Thailand, cryptocurrencies are not considered legal tender. However, the Royal Decree on Digital Asset Business, issued in May 2018, categorizes crypto assets and NFTs as “digital assets.” This means that digital assets business operators can issue, trade, or exchange cryptocurrencies. This indicates that the Thai government is open to accommodating crypto-based assets. The Securities and Exchange Commission, Thailand, governs digital assets through the Royal Enactment on Digital Asset Businesses (REDA).

The Timeline
Crypto exchanges, brokers, and dealers in Thailand are required to obtain licenses from the SEC Thailand. However, local banks and financial institutions are still prohibited from directly engaging in crypto transactions. Here is a timeline of the key events related to crypto regulations in Thailand:

The early stages:
– 2014: The Bank of Thailand stated that Bitcoin is not a currency and carries risks.
– 2017: In July, Thailand hosted a meeting of the UNOCS Regional Office for Southeast Asia and the Pacific, expressing its desire to enhance its ability to trace and investigate cryptocurrencies.
– 2018: Thailand took significant steps to establish a comprehensive regulatory framework for cryptocurrencies. In May 2018, the Ministry of Finance introduced an Emergency Decree on Digital Asset Businesses, making it the first legislation to regulate digital assets and ICOs. In June 2018, the SEC issued regulations for ICOs, outlining licensing requirements and fundraising thresholds. Satang became the first crypto exchange in Thailand.
– 2019: The SEC approved the first four crypto exchanges, providing a framework for their operations. These exchanges were required to comply with anti-money laundering (AML) and know-your-customer (KYC) norms. In July 2019, the SEC granted an additional license to a crypto brokerage firm, demonstrating the government’s commitment to a well-regulated crypto market.
– 2020: The SEC proposed new regulations that mandated crypto exchanges to have a minimum registered capital of $1.6 million and a minimum $1 million digital asset operation fund.
– 2021: The Thailand SEC enforced mandatory identification verification for crypto trading accounts, further strengthening AML efforts. In June 2021, following the market collapse, the SEC prohibited meme tokens, fan tokens, NFTs, and digital tokens used in blockchain transactions issued by digital asset exchanges or related individuals.
– 2022: Thailand considered imposing a 15% tax on digital asset trading. The country also made it mandatory for operators to inform people about the risks and volatility of crypto before they invest, tightening rules on crypto advertising. In March 2022, Thailand issued rules to ban digital assets as a means of payment for goods and services starting from April 1, 2022.
– 2023: The Thailand SEC banned crypto lending and staking services as a measure to regulate certain DeFi products.
– 2024: The Thailand SEC implemented new crypto-friendly regulations by removing investment limits for retail investors in asset-backed digital tokens and introducing stringent rules for custodial wallet management. Previously, retail investors were capped at 300,000 baht per offering in asset-backed ICOs. In mid-January 2024, the Thailand SEC lifted restrictions on digital token investments, reaffirming its crypto-friendly stance.

The Latest Development
The Thailand SEC has been transitioning towards a more crypto-friendly approach. The updated regulatory framework was published in January 2024. Digital asset businesses operating in Thailand are required to obtain licenses and adhere to the rules set by the SEC. The limit on asset-backed tokens for retail investors has been removed. Previously, retail investors were restricted to 300,000 baht per offering in asset-backed ICOs. Additionally, dedicated entities for custodial wallet management must be established. Any firms looking to grow in the crypto field must obtain approval from the SEC. However, the SEC has decided not to allow spot Bitcoin exchange-traded funds (ETFs) in Thailand.

Taxation Policies
Thailand announced in January 2022 that a 15% capital gains tax would be imposed on profits from crypto trading. In March 2022, the Thai government reportedly exempted crypto traders from the mandatory 7% value-added tax (VAT) on authorized exchanges. It also offered a 10-year exemption for investors who invest in crypto startups in the country for at least two years. Income earned from crypto trading or mining is considered capital gains, and the new rules allow traders to offset their annual losses against gains made in the same year. From 2024, Thailand plans to tax overseas income from crypto trading, according to a recent report.

Conclusion
As the crypto landscape continues to evolve, countries around the world are constantly developing new regulations. Thailand has been proactive in passing laws that align with the crypto industry, and recent updates indicate its pro-crypto stance. It remains to be seen what Thailand has in store for crypto enthusiasts in the near future.