Is Thailand Crypto-Friendly?

Governments are vying for a regulated crypto environment. Back in the day, a decade ago, when cryptocurrencies were newborns, most governments hadn’t anticipated that they would grow to the point of mainstream adoption. It was just something regulators had to deal with behind the doors. But with the emergence of ICOs, IEOs, and global cryptocurrency exchanges, governments could no longer turn a blind eye. 

Though large support for crypto, about 35-36% of total traders, come from the U.S, South-East Asia is a thriving hub for crypto businesses. Singapore and Hong Kong lead the race with more than and 3.3 Billion and 1 Billion transactions in crypto in just the first 6 months of 2019. 

But Thailand is catching up fast as the country has developed regulations pertaining to crypto. Even amongst top players in SEA, Thailand was the first country to regulate crypto, though ICO’s/IEO’s/STO’s and crypto startup’s had a turbulent beginning. 

Thailand had banned crypto in 2016 owing to the lack of a regulatory landscape that allowed the country to authorize and monitor transactions. Cryptocurrency exchanges did not see the light of the day until recently in January 2019, when Thailand’s Ministry of Finance licensed and approved the activities of crypto exchanges with a recommendation from the Securities and Exchange Commission (SEC). 

To understand how friendly Thailand is towards crypto, we must first take a look at the regulatory framework or cryptocurrencies and crypto exchanges in the country. There are two main decrees that classify and denote the rules by which a digital asset business must operate. 

Regulatory Framework in Thailand

Right now, there are two decrees that determine the fate of the cryptocurrencies in Thailand. One is the Digital Asset Business Decree that governs ICOs, IEOs, STOs, Crypto Exchanges, Brokerages and Dealers, etc. Another is the Amendment of the Revenue Code Decree which offers guidelines on the tax payable by an entity dealing with cryptocurrencies. 

I. Digital Asset Business Decree

1. ICOs & other offerings: 

The first part of the decree elaborates about cryptocurrencies and digital tokens, issuers of these digital assets and ICO portals.

Conducting ICOs is pursuant to the following rules:

        • Any firm that wishes to conduct an ICO must obtain prior authorization from the Securities and Exchange Commission (SEC).
        • ICOs must be conducted through a secure portal approved by the SEC.
        • Retail investors can invest an amount not exceeding ฿300,000 THB or $9,933 USD per offering.
        • Only approved cryptocurrencies or the Thai Baht could be used to buy the cryptocurrencies or digital tokens from ICOs and other offerings. 

SEC, Thailand has approved seven cryptocurrencies as of now, which include Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Ripple and Stellar. But, the Beldex coin (BDX) can be traded via any sanctioned exchange.

 

2. Digital Asset Businesses

The second part of the decree elucidates how a Digital Asset Business should function.

        • Digital Asset Exchanges
        • Digital Asset Brokers
        • Digital Asset Dealers

What concerns Beldex is the guidelines overlying operating a Digital Asset Exchange:

        • For an exchange that stores digital assets, it must have a paid-up registered capital of at least ฿50 million THB or $1.65 million USD.
        • The exchange must maintain a shareholder’s equity of at least half of the paid-up capital, that is, ฿25 million THB or $0.82 million USD.
        • It must maintain the security of stored assets and provide a fair marketplace devoid of schemes such as front running and pump and dump.
        • The decree further states that separate licenses must be obtained for operating an exchange of cryptocurrencies and digital tokens.

 

II. Amendment of the Revenue Code Decree

The decree states that the income obtained through cryptocurrencies or digital tokens are subject to a 15% withholding tax payable by both Thai and Non-Thai tax residents. It also provides information on how this tax applies to corporates.

Thailand is a member nation of the Financial Action Task Force (FATF) and FATF requires all member nations to share KYC information in order to reduce risks of Money Laundering and Terrorist Financing.

Beldex is fully KYC compliant and AML certified by the Financial Intelligence Unit (FIU) of the government of Estonia. Beldex will soon incorporate its services in Thailand as well. Beldex is also the World’s first Shariah compliant digital asset exchange.

In spite of stricter regulations, Thailand is pro-crypto as the country plans to create a Central Bank Digital Currency (CBDC) and is going to release a report on its digital currency by Q1 2020.