The Thai cabinet has approved a draft decree to regulate cryptocurrencies and initial coin offerings. The definition of digital assets has been modified from the previous draft but the tax structure remains. All crypto businesses must obtain licenses and report information to the anti-money laundering office.
Royal Decree to Regulate Crypto Approved
The Thai cabinet has approved a draft of a royal decree to regulate cryptocurrencies and initial coin offerings (ICOs), according to local media.
Finance Minister Mr. Apisak Tantivorawong revealed that no major changes have been made to the draft proposed by his ministry earlier this month. The only significant change is the definition of digital assets, which is now “cryptocurrencies and digital tokens, removing other assets such as electronic data, as specified in the previous draft,” the Bangkok Post reported. The decree will be published in the Royal Gazette, after which it will become law. The news outlet conveyed the minister’s explanation:
The new law to comprehensively regulate cryptocurrencies and digital tokens is necessary to prevent money laundering, tax avoidance and crime…The new law is not meant to prohibit cryptocurrencies, initial coin offerings (ICOs) and other digital asset-related translations, but to protect investors.
Mr. Apisak added that his ministry and the Thai Securities and Exchange Commission (SEC) are working on “laws that require all digital asset transactions, including those of digital asset exchanges, brokers and dealers, to be registered with relevant authorities,” the news outlet noted.
Thai Rath elaborated, “Those involved in all digital currency businesses, such as dealers or digital currency exchanges must obtain a license from the [Thai] SEC or a foreign currency dealer. They must report the source of the assets and the amounts of transactions to the Anti-Money Laundering (AML) Office,” adding that “the government wants to protect retail investors.”
Deputy Finance Minister Mr. Wisut Srisuphan confirmed that taxation on crypto traders as proposed in the previous draft remains unchanged, the Bangkok Post described, adding:
Investors who make digital-asset related trades will be liable for a 7% value-added tax (VAT) payment, on top of the 15% withholding tax on capital gains and returns from such investments, when the new law is enforced…Retail investors will be exempt from paying VAT if they trade digital assets through exchanges.
Those who have no capital gains will only pay VAT, the deputy finance minister clarified.
Unfavorable for ICOs
Korn Chatikavanij, chairman of the Thai Fintech Association, was quoted by the Bangkok Post commenting on the new tax law that it “would hinder the growth of domestic startups as they will register their businesses overseas to avoid the levy.” He believes that “it is not a problem for ICO issuers” to take their offerings to Singapore even though the cost could be higher than in the country. The news outlet quoted him saying:
Singapore is a good location to raise funds from ICOs and it waives the capital gains tax, so the market environment supports the registration of ICOs with good prospects there.
The draft decree will grant ICO issuers 90 days to inform the Thai SEC of their plans before the law takes effect, the news outlet also reported. This period was extended from 60 days after market participants complained that “60 days was not a reasonable amount of time,” according to the finance minister.
Meanwhile, the Thai Post reported that the Thai Stock Exchange-listed Jay Mart Plc has postponed the sale of its Jfin coin on a local crypto exchange TDAX from April 2 to May 2, as the company awaits clarification of the royal decree.
What do you think of Thailand’s regulations for cryptocurrencies and ICOs? Let us know in the comments section below.
Images courtesy of Shutterstock and the Thai government.