Thailand's blockchain regulation policy and practice (one)

Among Southeast Asian countries, Singapore has become a famous center for blockchain entrepreneurship due to its developed economy, finance and highly market-oriented background. (Singapore blockchain supervision policy and its advantages and disadvantages evaluation, corporate entrepreneurship compliance countermeasures, can be found in Deng Jianpeng, Sun Penglei: "Intermediary Chain Supervision and Compliance", Mechanical Industry Press, 2019 edition). In addition, since 2018, Thailand has also actively followed up, and the attitude towards the blockchain (including various financing and currency-issuing activities) has undergone a major change. Its important symbol is that Thailand has introduced the blockchain and digital assets in recent years. Under the premise of satisfying its legal requirements, enterprises can raise funds and open virtual currency exchanges in the country. Therefore, the details of the country's specific regulatory policies are particularly worthy of attention from entrepreneurs and investors. According to the author's recent research, some blockchain-related institutions in China have already traveled to Thailand to develop their business, such as the establishment of a new virtual currency exchange. At present, we have not seen a detailed introduction of relevant policies by domestic researchers. This paper tries to analyze this in detail.

I. The development of the development and regulatory attitude of the blockchain in Thailand

In Southeast Asian countries, Thailand is the second country to actively embrace virtual currency and blockchain after Singapore. The Thai government closely follows the financial technology innovation, timely changes the regulatory attitude, and improves the legislation of virtual currency and ICO-related fields, making the development of blockchain technology in Thailand leading in Southeast Asian countries, and the supervision is more inclusive, attracting many investors. As one of the potential emerging markets in Southeast Asia, Thailand is extending its olive branch to China's blockchain companies, hoping that they will participate in the blockchain industry in Thailand with their own technology.

From “rejection” to “hug”, Thailand’s attitude towards ICO, digital currency, and blockchain technology has changed dramatically in just five years. In August 2013, the Bank of Thailand announced that Bitcoin was illegal and prohibited Bitcoin circulation transactions, making it the first country in the world to ban the use of Bitcoin. But only six months later, the Bank of Thailand has conditionally lifted the ban on bitcoin. Bitcoin.co.th, Thailand's largest bitcoin trading website, announced the resumption of normal trading in February 2014. The Bank of Thailand allows Bitcoin to trade and trade, but requires transactions to be limited to Thailand and settled in Thai baht. No foreign currency is allowed. 】.

In the past two years, the Thai government has actively embraced blockchain applications such as digital currency and adopted a relatively loose policy. In July 2017, Thailand’s First Deputy Prime Minister and Minister of Finance, Qi Qi, ordered the Bank of Thailand to pay close attention to Bitcoin and let the Bank of Thailand (BOT) study whether Bitcoin is suitable as a legal payment method for the country and relax supervision over digital currency. In order to prevent financial technology innovation [2]. In September of the same year, the Securities and Exchange Commission of Thailand (SEC, hereinafter referred to as “Thai SEC”) saw digital currency communication as a refreshing and positive move, and wrote in its website statement, “The Thai Securities and Exchange Commission is aware ICO is important to startups in raising funds and encourages companies including high-potential technology start-ups to obtain funding through ICO. [3]”

Second, the relevant legislation of the blockchain

In the first half of 2018, Thailand improved the virtual currency and ICO-related legislation to create a more predictable investment environment for investors. The Thai Finance Minister has said that it is necessary to enact new laws to regulate cryptocurrencies and digital tokens. The new law does not prohibit cryptocurrency, ICO and other virtual currency transactions, but to prevent money laundering, tax avoidance and criminal activities. For the purpose of protecting investors.

On May 13, 2018, Thailand first introduced the Royal Decree on Digital Asset Businesses BE 2561 (2018), hereinafter referred to as the Royal Decree, which marked the emergence of Thailand as a digital figure in the world. One of the countries with long-term regulation of assets with clear laws and regulations. The decree consists of 100 parts and will take effect on May 14. Less than a month after the law came into effect, the Thai SEC passed the rules on cryptocurrency and the ICO regulatory framework on June 7, and released the details of digital asset trading regulation the next day. The new regulations set strict conditions for ICO and set specific requirements for market operators, ICOs and approved cryptocurrency exchanges, which will take effect on July 16, 2018.

Third, the specific expansion of the application of blockchain in Thailand

In the first half of 2018, Thailand further increased its participation in the blockchain and tried to experiment with blockchain technology in various fields. On February 19th, the Ethereum Blockchain signed a memorandum with the Ministry of Digital Affairs of Thailand to announce the launch of the KYC project. The two parties cooperated to establish a nationwide digital identity verification and online payment system based on blockchain technology. On March 19, the Bank of Thailand announced that 14 Thai banks, including Pangu Bank and Taijing Bank, jointly launched the Thai Blockchain Community Program, which will use a blockchain sharing platform based on the Linux Foundation's superbook structure to characterize bank guarantee functions. . In May, the Thai Stock Exchange announced the launch of its “LiVE” blockchain crowdfunding platform, which promotes P2P lending in an organized manner. In June, Bank of Thailand Governor Santiprabhob and the private bank jointly announced the “Inthanon Project”, trying to create a bank-based blockchain-based cryptocurrency, making the inter-bank transaction process efficient, safe and cost-effective. Santiprabhob also said that the development of the central bank digital currency is currently in progress. On August 21st, the Bank of Thailand announced that it would jointly launch the “Virtual Thai Baht Project” with R3 Co., Ltd. and eight commercial banks, using the distributed ledger technology and the CORDA platform to issue the official virtual currency of Thailand, named “Inthanon”. "This virtual currency will use blockchain and digital currency technology to enhance the upgrading and transformation of the Thai financial industry, and use the high security, exclusive and transfer speed of blockchain technology to improve the efficiency of fund transfer between banks. [4]"

4. Thailand's blockchain regulatory policy

(1) Key elements of virtual currency regulation

For the supervision of virtual currency, the Royal Decree of Digital Assets Operation, which came into effect on May 14, 2018, [5] has the following key elements:

1. Definition and classification of digital assets

Virtual currency based on blockchain technology is a legal gap in most countries, and it is not a security in the end. This is a major problem in the field of virtual currency. Thailand treats the definition of digital assets, virtual currency and digital tokens separately and classifies them as follows: According to Article 3 of the Royal Decree, “digital assets” refer to Cryptocurrencies and digital tokens. ). The Royal Decree gives digital assets a dual nature of “currency” and “securities”, and how it is determined depends on the purpose and development purpose of the cryptocurrency.

Digital assets are defined as "virtual currency" (Cryptocurrencies). Virtual currency refers to an electronic information unit created on an electronic network system that is intended to be an intermediary for the exchange of goods, services and other rights, or for the exchange of digital assets, including other electronic information issued by the Securities and Exchange Commission. unit.

Digital assets are defined as “digital tokens” when they are “allocated investment income or equity”. Digital token refers to an electronic information unit created on an electronic network or system that has the following purposes: (1) assigning rights to participate in any project or activity investor; (2) allocating goods or services to purchase rights or other specific rights and interests. In addition to the two categories listed above, the Royal Decree stipulates that digital tokens include other units of interest expressed by the Securities and Exchange Commission as stipulated in the agreement between the issuer and the holder.

The Royal Decree also adds a supplement to the classification of digital assets. The SEC may designate any electronic data similar to digital currency and digital tokens as virtual currency or digital tokens.

2. Legal virtual currency business

Article 3 of the Royal Decree divides the virtual currency business into the following four categories: the Digital Asset Exchange Centre; the Digital Asset Dealer; the Digital Asset Broker; from Thailand. Other relevant electronic assets issued by the SEC and issued by the Minister. The supervision of the virtual currency business in the Royal Decree mainly focuses on these types of businesses. Investors need to correctly understand the definitions of these types of business in order to correctly apply the relevant Thai regulatory laws.

According to Article 3 of the Royal Decree, “Digital Assets Trading Center” means any centre or network established to buy or sell virtual currency, in the form of ordinary trade, by pairing or looking for contract parties, or for the need to buy and sell trading virtual currency. People set up systems or provide convenience to match agreements. The above does not include the type of center or network specified by the Securities and Exchange Commission. We believe that “digital asset trading center” generally refers to a centralized exchange, such as fire currency pro, OKex or currency security.

“Digital Asset Broker” refers to the person who provides or shows the general person at any time to provide virtual currency trading or trading services with others, trades in the form of ordinary trade, and collects fees or gratuities from it, but does not include securities transactions. The form of agency or agent prescribed by the committee. We believe that “digital asset brokers” generally refer to hackers of OTC transactions (over-the-counter transactions).

“Digital Asset Issuer” refers to those who provide or show the general public that they can provide virtual currency trading or trading services in their own name in the form of ordinary trade. They generally provide services outside the virtual currency trading center, but do not include the Securities and Exchange Commission. The prescribed form of service. We believe that “digital asset issuers” generally refer to the project side of the ICO.

3. Thailand's supervision of the ICO portal

In addition to the above three types of business types that require investors to focus on, the Royal Decree also stipulates a special subject such as the ICO Portal, namely the “ICO Portal” or “Digital Token Auctioneer”. “ICO Portal” means the electronic system supplier that newly issues digital tokens. The supplier is obliged to screen and review the digital token type, issuer qualification, completeness and correctness of the digital token information table and the prospectus. The draft, and any other information disclosed by the above service providers. We believe that the “ICO Portal” refers to an intermediary service platform that helps blockchain project crowdfunding (ICO), which helps ICO project financing and has the obligation to review projects.

4. Authority of the Thai regulatory authorities

The Thai SEC has the power to formulate policies on digital assets, and to supervise and manage digital assets and digital asset operators. It is mainly responsible for four areas: (1) Formulating regulations, rules, notices or regulations on digital asset issuance and digital asset auctions. (2) The handling fee for applying for permission, approval, approval application, submission of opinions, submission of digital token information schedule, annual information submission form, various application forms or authorized or approved business operations. (3) Establish guidelines for problems arising after the entry into force of the Royal Decree. (4) Acts arising out of the purposes of this Royal Decree.

(II) The core of the supervision of the Thai Digital Assets Trading Center

The Royal Decree does not directly stipulate the entry barrier for digital asset trading centers. The specification of the digital asset trading center mainly reflects the behavioral norms of such institutions. Article 38 of the Royal Decree stipulates that this part (ie Part VI of the Royal Decree, including Articles 38 to 50, preventing the sale of unfair digital assets) applies to transactions in the Digital Assets Trading Center under this Act. Digital assets and trading behavior.

1. Thailand's prohibitive measures and penalties for the main body

Articles 40 and 41 of the Royal Decree of Thailand prohibit the sexual provisions against all subjects. Article 40 stipulates that it is forbidden for anyone to tell, disclose or guarantee any false information, or the financial status of the digital token auction, the major error information related to the operating results, the type of digital tokens and important information, or the price of the digital asset purchase and sale, which may affect The price of a digital asset or the decision of the investor. Article 41 stipulates that no one is allowed to analyze, predict and verify the financial status, operating performance, types of digital tokens and important information of digital tokens, or the trading price of digital assets. Use false and inadequate information to analyze, predict, and ignore the correctness of the message, distorted the analyzed and predicted news, exposes the information analysis and predictions to the public, and makes recommendations that affect the price of digital assets and investor decisions. Subjects who violate these two articles will be punished by imprisonment for not more than 2 years, or a fine of 500,000 to 2 million baht, or imprisonment and fines.

2. Thailand's insider trading rules and penalties

Article 42 of the Royal Decree deals with the prohibition of insider trading, and Articles 43 and 44 define and speculate on the insider who knows or grasps the internal information mentioned in Article 42. The Royal Decree is clear about the above-mentioned insider trading related behavior. The corresponding penalty.

The Royal Decree prohibits persons who know or master the internal news, digital token types and important information of the digital token auctioneers from making the following two types of actions: (1) buying and selling digital tokens, and generating bundles of interests for futures contracts signed by themselves or others. . There are four types of exemptions: (a) in accordance with the law, court orders, and orders of the competent authority in accordance with the law. (b) Performing the futures contractual obligations related to digital tokens that I have signed before I know or master the internal news, digital token types and important information of the digital token auctioneers. (c) authorizes the obtaining of a license in accordance with the law, or the registration of the manageable capital, or the other person who invests in the sale or purchase of the digital token, or the binding constraint with the digital token futures contract, if the person does not understand and participate in the decision-making process. relationship. (d) There is no other prohibition of exploitation that discriminates against others or the Securities and Exchange Commission. (2) directly or indirectly publish internal information to others in any form, whether or not it knows whether others use the information to obtain benefits from the sale of digital tokens, or to create a binding relationship with the digital token futures contract, regardless of the bundle of interests For yourself or others, unless the act does not infringe the rights of others and is in compliance with the Securities and Exchange Commission. Anyone who violates section 42 will be punished by imprisonment for not more than 2 years, or a fine of 500,000 to 2 million baht, or both imprisonment and fines.

Articles 43 and 44 define and speculate the persons who know or master the internal information mentioned in Article 42. Article 43 stipulates that those who know or master internal information include: (1) members, managers or business controllers of the digital token auctioneers. (2) The staff or employees of the digital token auctioneer shall be employed in positions responsible for internal information or access to internal information. (3) Anyone who obtains internal information as a service position in the Digital Token Auction System, or any other person related to internal information, including positions or field staff, employees and partners involved in internal information. Article 44 stipulates that the following persons who purchase the digital token or the contract with the digital token futures contract shall be the insider and master of the internal information mentioned in Article 42: (1) The percentage of the auctioneer holding the digital token The fifth generation of digital tokens that can be sold, including the digital token holder's spouse, the cohabiting couple's other party or the minor tokens held by the minor children. (2) Digital token auctioneers serve on committees, managers, business controllers, staff and employees who have access to internal information positions. (3) Parents, heirs, adoptive parents and foster children of persons mentioned in Article 43. (4) The siblings and siblings of the persons mentioned in Article 43 are half-brothers and half-brothers. (5) The spouse of the person referred to in Article 43, (3) and (4) or the other party of the cohabiting couple.

3. Thailand's regulations and penalties for manipulating market behavior

The Royal Decree stipulates the manipulation of the market and the “presumption” of the manipulation of the market, and imposes corresponding penalties on the actors who manipulate the market.

Article 45 of the Royal Decree restricts the manipulation of special subject markets. This article stipulates that for any reason, virtual currency sellers and virtual currency brokers are prohibited from having the following actions (including those who operate internal information of the virtual currency or futures contracts of any one of the business enterprises in the business enterprise or Employees, the following may cause losses to any customer under the company), without any exceptions to the exemption: (1) send, modify, cancel digital tokens or futures related to digital tokens before fulfilling customer orders Contract order. (2) Before fulfilling the customer's order, send, modify, cancel the digital token or digital generation by grasping the relevant information of the customer's sending, modifying, canceling the digital token or the futures contract order related to the digital token. Coin-related futures contract orders are disclosed to others. Anyone who contravenes section 45 shall be punished by imprisonment for not more than 2 years, or a fine of 500,000 to 2 million baht, or imprisonment and fines.

Article 46 of the Royal Decree restricts any market manipulation of any person. This article prohibits anyone from: (1) sending orders that may cause the general public to misunderstand the price and quantity of digital assets, or to conduct digital asset transactions of the same nature. Any person who violates this provision shall be punished by imprisonment for not more than 2 years, or a fine of 500,000 to 2 million baht, or imprisonment and fines. (2) Continuously sending orders or buying and selling digital tokens, the purpose is to make the transaction price and quantity of digital assets deviate from the market. Any person who violates this paragraph shall be punished by imprisonment for not more than 5 years, or a fine of 1 million to 5 million baht, or both imprisonment and fine.

Articles 48 and 49 of the Royal Decree supplement Article 46, and in some cases it will be legally “speculated” to produce the circumstances specified in Article 46. Article 48 stipulates that the two categories of circumstances will be “speculated” to lead to the misunderstanding described in Article 46(1), and will result in the deviation of the price and quantity of digital assets traded in the 46th (2) from the market: (1) The purchase and sale of digital assets, regardless of whether the buyer or the seller’s ultimate beneficiary is the same person; (2) when the digital assets sold at the same time that they or their partners are known to be of the same type, with similar quantities and similar prices, place an order or Selling digital assets. And Article 49 stipulates that persons who “speculate” the following acts violate Article 46: (1) open a bank account, digital asset operator account or other joint account for payment or settlement related to digital assets or based on digital assets Related expenses. (2) Let others use their own bank account, digital asset operator account or other joint account to pay or settle related expenses related to digital assets or based on virtual currency. (3) Let others use their own digital asset trading account. (4) Mutual replacement settlement or payment of digital asset transactions (5) Mutual replacement Use other assets as collateral for digital asset transactions. (6) Let others take advantage of or be responsible for the payment and settlement of their digital asset transactions. (7) Mutual transfer or acceptance of the transfer of virtual currency.

According to Article 50 of the Royal Decree, anyone who enters the digital asset trading system to send, modify or cancel the virtual is prohibited in the case of knowing that the price and quantity of digital assets may be off the market or causing the digital asset trading system to slow down or shut down. Trading orders for currencies. Any person who violates the provisions of Article 50 shall be punished by imprisonment for not more than 5 years, or a fine of 1 million to 5 million baht, or both imprisonment and fines.

(For the regulatory policies, practices and related evaluations of Thailand in areas such as ICO, please see the follow-up article “Regulations and Practices of the Thai Blockchain (Part 2)”, which will be completed and released next week)

Quote: [1] "Thailand has conditionally lifted the Bitcoin trading website to resume online trading", http://tech.hexun.com/2014-02-18/162244796.html, visit time: September 1, 2018. [2] "Thailand Deputy Prime Minister ordered the relaxation of bitcoin regulation so as not to hinder the development of financial technology", http://www.8btc.com/bank-of-thailand-study-bitcoin, visit time: September 1, 2018. [3] "Thailand's cryptocurrency: from James Bond to Bitcoin", http://baijiahao.baidu.com/s?id=1604406714642662087&wfr=spider&for=pc, access time: September 1, 2018. [4] "The Bank of Thailand announced the issuance of virtual currency, named because of his agriculture", https://mp.weixin.qq.com/s/F-HfkcGcrUAex03PA_qHlw, visit time: September 1, 2018. [5] For more relevant regulatory content in Thailand, see the official website of the SEC in Thailand: https://www.sec.or.th/EN/Pages/Home.aspx; the website of the Royal Thai Government Gazette: http://www.mratchakitcha.soc .go.th/; Government Data Management Committee website: http://www.oic.go.th/web2017/main.html.

Author: Deng Jianpeng