Thai Securities Firms Joining Together to Build Cryptocurrency Exchange

The Royal Palace in downtown Bangkok, Thailand. The royal decree governing digital assets has clarified and strengthened regulations of the nascent industry.
The Royal Palace in downtown Bangkok, Thailand. The royal decree governing digital assets has clarified and strengthened regulations of the nascent industry.

Bangkok, THAILAND – After Thailand’s successful release of comprehensive cryptocurrency and initial coin offering (ICO) laws last month, the Thai Association of Securities Companies (ASCO), which is focused on developing and promoting Thailand’s capital and securities market went into full gear to explore the potential for a foray into the cryptocurrency markets. According to a report by the Bangkok Post, ASCO has been studying the possibility of establishing a join cryptocurrency exchange between existing securities companies and plans to apply for a cryptocurrency exchange operating license with the Thai Securities and Exchange Commission (SEC), which proves that clear regulation can encourage mainstream adoption of cryptocurrencies. And although ASCO’s primary role is to encourage the growth and development of Thailand’s securities market, it seems that its members are not only open to exploring cryptocurrencies and ICOs, they are actively interested to pursue new opportunities in the space. Speaking to the Bangkok Post, Pattera Dilokrungthirapop, chairwoman of ASCO said that securities firms, which are ASCO members have expressed strong interest in operating digital asset and related businesses, including ICO portals, cryptocurrency exchanges, brokerages and dealers. With Bitcoin’s unprecedented rise in value last winter, interest in cryptocurrencies has grown exponentially and Thailand has not been immune to crypto-fever. According to Pattera, the securities trading business is similar to digital asset trading, which makes it easy for them to offer services and trading platforms to investors.

A woman walks in front of the main price board at the Stock Exchange of Thailand in Bangkok. Traditional securities firms are getting onboard digital currencies and ICOs.
A woman walks in front of the main price board at the Stock Exchange of Thailand in Bangkok. Traditional securities firms are getting onboard digital currencies and ICOs.

Under Thailand’s existing securities business license, securities firms can already conduct some digital business, including digital asset dealing and brokerage as well as operating ICO token e-wallets, but securities companies will need to develop structures to separate the investors’ property from the company’s assets.

Pattera adds that several securities firms are planning to jointly obtain a cryptocurrency exchange license to reduce operating costs and share technology,

“We are confident that investors will prefer trading with us, since we have been in the securities trading business for a long time.”

“Investors can trust our trading system, which has secured asset preservation.”

And ASCO has big plans to grow its members’ digital portfolios, with Pattera adding that ASCO, which already consults with the SEC on securities issues, will continue to work closely with the SEC to explore more digital asset businesses.

Central Mall in downtown Bangkok, Thailand. The glittering lights of the city just got brighter for Thai crypto-advocates.
Central Mall in downtown Bangkok, Thailand. The glittering lights of the city just got brighter for Thai crypto-advocates.

Thailand is the first country in Southeast Asia to release comprehensive laws and a licensing regime to govern cryptocurrencies and ICOs. Singapore, with its comprehensive securities laws and highly developed capital markets, issued guidelines governing cryptocurrencies and ICOs as far back as 2014, but has made no new laws specific to the space, preferring to allow a more liberal approach to innovation, while other countries in the region have adopted a more piecemeal approach.

Thailand’s digital asset decree, which is awaiting publication in the Royal Gazette, divides ICO tokens into two distinct regimes, digital assets (which are not dissimilar to stocks, bonds, debentures and futures) and digital tokens, which more closely resemble currencies. According to the digital asset decree, all digital asset transactions will be subject to a relatively high 15 percent withholding tax as well as a capital gains tax on any profits through the trading in digital assets.

A view of the Royal Palace in downtown Bangkok. Thailand's digital asset decree is awaiting publication in the Royal Gazette.
A view of the Royal Palace in downtown Bangkok. Thailand’s digital asset decree is awaiting publication in the Royal Gazette.

According to the Bangkok Post, there are many companies expressing interest in applying for digital asset licenses, with no less than seven ICO portals and about ten cryptocurrency exchanges looking to be licensed. But foreign players looking to set up shop in Thailand will need local partners. According to the SEC’s deputy secretary general Tipsuda Thavaramara,

“The SEC has informed foreign firms interested in operating as ICO portals or crypto exchanges that they need to set up domestic firms or find local partners to obtain licenses.”

In contrast, Singapore does not require foreign firms setting up cryptocurrency exchanges within its jurisdiction to apply for licenses and while Singapore’s financial regulator, the Monetary Authority of Singapore monitors the space closely, it does not intervene except where existing securities laws are at risk of being infringed. The conducive environment in Singapore has lead to some of the world’s biggest cryptocurrency exchanges by market volume such as Huobi and Coinbene laying down roots in the island nation, which is also one of the world’s global financial capitals. Nonetheless, Thailand’s digital asset decree is likely to be welcome as it provides the certainty and regulatory framework necessary for growing its domestic cryptocurrency and ICO industry.