*This alert has utilised a translation tool
The Thailand Securities and Exchange Commission (“SEC”) has prohibited digital asset exchanges from providing services related to certain cryptocurrencies like meme-based tokens, non-fungible tokens (NFTs) etc.
The notification of the SEC bearing no. Kor Thor. 18/2564 on the subject of Rules, Conditions and Procedures for Undertaking Digital Asset Businesses (“Notification”) was passed on June 9, 2021, and came into effect on June 11, 2021, after its publication in the Government Gazette (access press release here).
Prior to the Notification, the digital assets had the autonomy to select and trade the digital assets. The Notification is the first substantive invocation towards banning any kind of digital assets from being traded on its exchanges. It states that the utility tokens or cryptocurrencies of the following kinds are prohibited:
(a) a meme-based token which have no inherent or underlying substance and whose prices are influenced by social media;
(b) fan tokens based on famous influencers;
(c) NFTs; and
(d) digital tokens issued by digital asset exchanges or related persons and utilised in a blockchain transaction.
NFTs have been defined as a digital creation that declares ownership and grant of rights in relation to specific objects and cannot be exchanged for another similar digital token for the same value.
The Notification requires that where the digital asset exchanges or its related parties are the issuers of digital tokens, they should comply with the white paper and other relevant rules. In this context, the term related persons shall mean to include (a) directors, executives or controlling persons; (b) any juristic person controlled by these persons; and (c) parent company, subsidiary or an affiliate company. Failure to comply will result in the delisting of such tokens from exchanges.
Digital asset exchanges are further required to comply and revise their listing rules within 30 (thirty) days from the effective date of the Notification. The applicability of the Notification shall not be retrospective on the tokens which are existing in the market prior to June 11, 2021. Therefore, cryptocurrencies and other digital assets listed on digital asset exchanges prior to that date shall not be affected by the Notification.
Authored by Shivani Agarwal, Founder, and Samaksh Khanna, Co-founder.
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