The Securities and Exchange Commission (“SEC”) of Thailand has amended its regulations on digital asset operators and exchanges with a view to enhance business efficiency and protect investor. The amendment mainly involves stricter governance criteria and exchanges rules to align with international standards. The changes are in the SEC Notification No. GorThor. 23/2567, Notification No. GorLorThor. 24/2567, and Notification No. NorPor. 5/2567 on 16 August 2024.
Key Governance Updates
Key governance updates include the board governance requirement for digital asset operators with at least 10,000 customers or holding at least THB 500 million customer assets for 15 consecutive days must consist of at least 5 board of directors with at least 2 independent directors. The audit committee must also be established, with at least half of them being independent directors, to provide a check & balance mechanism to ensure the compliance of the business operator. The board governance must be established within 180 days after the digital asset operator meets the required condition.
The qualifications have been increased, the authorized directors and managers must either have at least 1 year’s relevant experience in digital assets or complete an SEC-approved training course.
The new governance requirements emphasize the internal control and operational structure of the business operator, including customer service system requirements to be more standardized and robust.
Exchange Rules
The updated regulations also impose minimum standards and guidelines for digital asset exchanges on the proposal of rules (“exchange rules”), which must secure SEC approval.
The exchange rules on listing and delisting must have clear and fair conditions, procedures, and timelines that comply with relevant regulations, with a primary focus on the benefits and impacts on investors.
The exchange rules on trading must demonstrate the efficient transactions, in line with market mechanisms, transparent, appropriate, fair, and capable of handling the volume of digital asset trading that occurs.
The exchange rules on clearing & settlement must demonstrate the secure, safe, reliable clearing and settlement of digital assets without causing risks of default. The calculation method of the digital assets value must also be reasonable.
The exchange rules on market makers should include qualification, scope duty, ongoing performance oversight, and non-compliance measures for market makers.
Upcoming regulations
In addition, there are certain regulations currently in progress, expected to be effective within Q3-4/2024, including Group ICO filing (“Shelf Filing”) application, Regulations to encourage the establishment of digital asset custodians in Thailand to increase opportunities for a wider variety of custodial services, Licensing provisions to support securities companies in selling investment tokens, and Capital requirements for digital asset business operators. Several regulations are expected to be implemented in Q2/2025, including Advertising and promotion guidelines, Know Your Customer (“KYC”) practices, and Reporting requirements for digital asset business operators.