Thailand Has New Pioneering Rules Covering Cryptocurrencies
Thailand’s leadership, innovation and clear rules has it right in the middle of the Cryptocurrency market
Regulators around the world have grappled with the issue of what category digital currencies and assets fall into, Thailand has skipped that debate.
Instead, Thai authorities wrote a new law to cover digital assets
The Digital Asset Business Decree defines both cryptocurrencies, as a medium of exchanging goods, and digital tokens as rights to participate in an investment, or to receive specific goods.
The government also amended its tax law so it can extract some revenue from the growing industry.
Like almost everything in the crypto world, the new move copped criticism from all sides. True believers are aghast that regulators even dare, well, regulate. More conservative elements see downsides in even giving these upstarts any credibility.
Thailand’s Securities and Exchange Commission is working to strike a balance between those who view cryptocurrencies as evil and those who use them for gambling, Archari Suppiroj, director of the commission’s Fintech department said at last month’s TechSauce conference in Bangkok.
If regulators make things too strict people will go overseas and Thailand’s ability to offer any investor protection will evaporate. That is a sentiment regulators worldwide share.
Regulation brings legitimacy, legitimacy brings, hopefully, widespread adoption.
Thailand’s regulations lay out rules for businesses that want to operate as an exchange, a broker, or a dealer.
They also formalize a process for ICOs (initial coin offerings) that’s similar to the system for issuing debt or equity.
Thailand requires a business plan, including audited financial statements.
A very interesting aspects of Thailand’s new rules is that all ICOs and trades must be paired with 1 of 7 specified cryptocurrencies.
The Commission has not formally named them, but Ms. Archari confirmed earlier comments to the media that the chosen list comprises: Bitcoin, Ethereum, Bitcoin cash, Ethereum classic, Litecoin, Ripple and Stellar.
They were selected, she said, because of their liquidity and convertibility to the Thai baht.
A 15% withholding tax is taken on profits, but that can be credited against an individual’s full-year income tax bill and so is just inconvenient .
Under the current tax code, trading of digital assets attracts a 7% VAT. That is on every trade, and a drag on the industry.
It seems this is a carryover from the old tax rules, with law firm Baker McKenzie telling its clients it expects an update to the code to eliminate VAT at least for individuals and trades through regulated exchanges.
Given Thailand is competing against dozens of other places that aim to be crypto hubs, it’s unlikely these new laws will see it overtake Japan, South Korea or Taiwan. But at least with leadership, innovation and clear rules, the country is in the play.
Have a terrific week.