Thailand’s SEC working towards updating ICO portal regulations
Thailand’s Securities and Exchange Commission (SEC), the independent state agency responsible for oversight and development of the Southeast Asian nation’s capital markets, is seeking public commentary on the updated set of rules it has proposed to regulate initial coin offering (ICO) portals.
In a notice published on its website on July 18, the SEC outlined that it is seeking public comments in relation to the criteria it has established for investor communication and service provision by ICO portals as part of its proposed regulations.
Easing knowledge test requirements
The regulations had been approved in principle last month and put an onus on ICO portals to ensure that retail investors take a knowledge test and pass that test before they are permitted to participate in trading ICO tokens.
The current regulations stipulate that retail investors must undertake knowledge tests on an ongoing three-monthly basis.
The updated regulations propose that ICO portals conduct suitability tests that are sufficiently comprehensive such that the investor understands the risks associated with any potential ICO-related investment. The SEC stated that the objective is that the investor has “a risk tolerance level appropriate and in alignment with the product risk.”
Instead of quarterly knowledge tests, the proposed regulations require suitability assessments to be carried out once every two years. In this way, the commission believes that it will reduce the administrative burden for ICO portals while reducing friction for the investor. It stated:
“These proposed requirements are in line with regulatory practices applicable to both securities and digital asset business operators.”
Jagdish Pandya, founder of blockchain venture builder BlockOn Ventures, told Decrypt that “Thailand has been a first mover for crypto regulations and the SEC has played a pivotal role in providing all regulated activities and licenses, much ahead of Singapore, Malaysia, Philippines, and Vietnam in South East Asia.”
Moving past previous ICO market failures
Pandya added that the proposed suitability tests would protect “amateur investors” from piling into ICOs and losing their funds like in the “old ICO scam era.”
ICOs first gained significant popularity in 2017 as the crypto market started to expand. Around $6.2 billion in funding was raised by a broad range of crypto projects in that year. However, a complete lack of regulation at the time meant that the ICO marketplace was laden with outright scams. ICOs were being hyped up in pump-and-dump schemes, with investors losing most, if not all, of their funds as the fraudulent ICO promoters rug-pulled them, abandoning the projects and taking off with the ICO funding.
Thailand’s existing ICO portal regulations were introduced in November 2023. The regulations require project promoters to make disclosures with regard to project creditworthiness and risk for debt-like tokens with a predetermined fixed rate of return.
Those promoting infrastructure-backed tokens, which allow the token holder to earn a revenue share from infrastructure projects, are subject to rules regarding items such as due diligence, asset valuation and issuer asset management.
