Thailand’s SEC tightens oversight of digital assets, plans to regulate off-the-shelf utility tokens

Over the past few months, the Thai SEC has taken steps towards stricter oversight of the Thai digital asset markets.

1. Thailand’s SEC imposed civil penalties for offenses related to fabricating information regarding the trading volume of digital assets on the digital asset exchange

Since the entry into force of the emergency decree on digital asset companies BE 2561 (2018) (the “Decree”), the SEC is actively monitoring the digital asset market. For example, several licensed digital asset exchanges and their related persons have been sanctioned for an offense under the executive order for placing an order to buy or sell digital assets in a manner that misleads others. people regarding the buying or selling volume of the digital asset. asset. These cases involved agreements between the digital asset exchange and the market maker who matched self-orders in their own trading account to maintain liquidity within the digital asset exchange itself. .

It should be noted that the violations took place in 2019 and the penalties imposed included the maximum civil fine, reimbursement of SEC expenses during the investigation, and barring the violator from being a director or officer for longer. one year.

These measures were taken by the SEC to ensure that the digital asset exchange has an established market surveillance system and a dedicated team to monitor any irregular trading activity that violates applicable regulations.

2. Thai SEC plans to regulate off-the-shelf utility tokens

To meet the growing demand for digital assets, the private sector has been proactive in implementing digital transformations to improve its business. As a result, tokenization has become one of the key strategies in integrating digital technology.

While digital tokens, including investment tokens and non-off-the-shelf utility tokens, are subject to regulatory controls (i.e. the issuer must obtain SEC approval and submitting a regulatory filing and writing a prospectus to the SEC), a -use utility token loan is not subject to such restrictions.

Due to the lack of regulatory controls, the SEC believes that some companies have taken advantage and exploited this loophole. Rather than providing utility token holders with out-of-the-box functionality, it has been used as a means of short-term capital gains through market manipulation and supply control. As a result, the 30e of May 2022, the SEC announced its intention to regulate off-the-shelf utility tokens which are currently exempt from regulatory requirements. A summary of the key takeaways from the SEC proposal is below.

The SEC also plans, in addition to the above, to revise the regulations for off-the-shelf utility tokens listed on the secondary market, which will include listing rules, trading rules, and market surveillance.

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