Two Royal Decrees have been published in the Thai Government Gazette on the subject of initial coin offerings, cryptocurrencies and digital tokens.

The South East Asian law firm of Tilleke & Gibbins reports that one of the decrees sets out rules for offering, trading, brokering, and exchanging digital currencies and digital tokens, while the other clears up some legal uncertainty regarding tax.

The first decree — named the Royal Decree on Digital Asset Business — makes a distinction between cryptocurrency on the one hand and digital tokens on the other. It also defines “digital asset business” to include the operation of a digital asset trading centre and/or of a digital asset brokerage and/or of a digital asset dealer, whilst also leaving room for the Securities and Exchange Commission (SEC) to identify further categories of business that it wants to regulate.

Engagement in digital asset business now requires a licence to be granted by the Ministry of Finance, on the advice of the SEC.

To stop the kind of skulduggery that often attends the birth of an ICO in Switzerland or the United States (the Wall Street Journal reported this month that fraudulent ICOs have raised more than US$1 billion there) the new rules say that companies can only offer digital tokens in ways prescribed by the SEC, and only after their prospecti have become effective. They can also only do so through a service provider approved by the SEC for the purpose. False, misleading and/or incomplete information will be frowned upon.

Penalties for non-compliance can be as high as 10 years' imprisonment and/or a maximum 2 million baht (US$62,285). Firms that are already conducting digital assets business will be 'grandfathered in' but must apply for licences within 90 days of the Royal Decree becoming effective, i.e. by 11 August.