FinTechs belonging to this category offer financial services using crypto currencies. This category also includes FinTechs utilising blockchain and distributed ledger technologies (DLT) upon which Bitcoin and Ethereum are based, among others. FinTechs develop and do research in this field in order to create new services – e.g. crypto currency exchange markets, wallet providers, NFTs-related services, new payment services, "smart contracts" or new clearing and settling services.
Attitude of the country towards financial services using crypto currencies
Thailand has had significant growth in the crypto currency sector, allowing many crypto currency-related Start-ups to earn a lot of money in recent years. Digital assets have generally been encouraged and supported by the government, which has allowed most digital asset businesses to be conducted under Thai laws, with a few exclusions, such as those on financial products with underlying digital assets and other related activities. However, there are strong opposing opinions within the financial sectors—including the Bank of Thailand—that crypto currencies have unacceptably high price volatility, risk cyber theft and personal data leakages, are tools for money laundering, and may lead to financial instability.
Obligations and requirements to provide financial services using crypto currencies described above
Generally, the Emergency Decree on Digital Asset Businesses, B.E. 2561 (2018) (the Digital Asset Decree) is the main regulation in Thailand governing digital asset businesses, including the issuance, and offering of digital assets to Thai investors. The Securities and Exchange Commission (SEC) acts as the regulator for the decree. All digital asset business operators are subject to the decree’s regulatory and licensing requirements, with a few exceptions as stipulated by the SEC.
Cryptocurrency exchange market
Under the Digital Asset Decree, a digital asset exchange is defined as a centre or network established for the purpose of trading or exchanging digital assets, operating by matching orders or arranging for a counterparty, or providing a system for or facilitating a person who wishes to trade or exchange digital assets to be able to enter into an agreement, or match the order in the normal course of business.
Under the Digital Asset Decree, a digital asset exchange can be categorised into two (2) types: digital token exchanges and crypto currency exchanges. Each type requires a separate license from the SEC.
To obtain a digital asset exchange license, a business operator must establish a company in Thailand with the minimum required paid-up registered capital, and the company must not operate as a digital asset dealer. The license fee is THB 2.5 million (approx. USD 73,114).
Wallet provider businesses are not currently regulated under the Digital Asset Decree and thus are not subject to the decree’s licensing requirements. However, in January 2021 the SEC held a public hearing relating to custodial wallet providers and indicated it may issue a regulation to regulate wallet providers.
NFTs related service.
Digital asset exchanges in Thailand are not permitted to list NFTs, as the SEC has prohibited digital asset exchanges from trading NFTs and some other types of tokens.
Nevertheless, the SEC’s guidelines for NFTs confirm that NFTs are not regulated under the Digital Asset Decree unless they have characteristics similar to utility tokens, such as determining the right to receive specific goods, services, or other rights, in which case they would be subject to an initial coin offering (ICO) requirement.
New payment services and new clearing and settling services
In Thailand, payment services and clearing and settling services are regulated under the Payment Systems Act B.E. 2560 (2017), which sets out the framework for a licensing and registration regime for electronic payment business operators.
Although there is no regulation that specifically regulates payment services such as clearing and settling, using blockchain or DLT, the BOT has published guidelines relating to the use of blockchains in financial services.
The BOT has recognised stablecoins (crypto currency backed by fiat currency or other assets) and explained that stablecoins backed by Thai baht may be deemed “e-money” regulated under the Payment Systems Act.
There is no regulatory requirement in Thailand relating to smart contracts, but smart contracts are recognised under the Electronic Transactions Act B.E. 2544 (2001).
Additional comments regarding the legal situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area
Although Thailand has specific regulations relating to digital assets, regulators have attempted to prohibit the use of crypto currencies as a medium of exchange in Thailand.
A recent SEC regulation prohibits digital asset business operators from facilitating the acceptance of digital assets as payment for goods and services, such as making advertisements that promote the acceptance of digital assets as a payment method.
Market size for financial services using crypto currencies and biggest companies in this business area
Thailand was ranked the country or economy with the 11th greatest interest in crypto currency in 2021 on the Crypto Interest Index by Coinformant, a leading crypto currency exchange in Australia.
The outlook for crypto currencies in Thailand is promising, after SCBx Group acquired 51% of Thailand's leading digital asset exchange, Bitkub Online Co, with an investment of THB 17.85 billion (approx. USD 522,036,637). The deal could become a major driving force for crypto currency trading in Thailand.
Currently, seven (7) companies have obtained a digital asset and/or crypto currency exchange license from the SEC.
Additional comments regarding the economic situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area
Thai regulators seem to be taking a measured approach by issuing regulations that slow the rapid growth of crypto currency in Thailand and its potential for misuse for illicit activities—an example would be anti-money laundering regulations.