Thai Securities and Exchange Commission today issued a number of announcements that would potentially have a regulatory impact on digital asset portfolios managers. Effective from February 24, crypto fund managers and investment advisers are required to apply for a licence to continue their businesses, according to a report in the Bangkok Post.
The regulator defines ‘digital asset investment advisers’ as those who give advice pertaining to “cryptocurrency or digital token trading to customers and receive remuneration for their services.” As such, the new regulations govern portfolio managers and distributors of virtual asset funds.
As things stood before, money managers trading assets that fell outside the legal definition of securities, futures contracts or equivalent financial instruments were not subject to the SEC supervision. Investors in crypto funds managed by unregulated portfolio managers also did not enjoy the protection of investor compensation funds.
“Although they may have been operating before the businesses are regulated under the Ministry of Finance’s Nov 27, 2020 regulation, all digital asset fund managers or advisers aiming to continue their businesses must submit applications to the SEC by the deadline,” the SEC added.
While crypto exchanges operated under the SEC radar, investors had little guidance on portfolio management business. Thailand now wants to increase oversight of cryptocurrencies and digital assets by tweaking asset management rules in the Thai crypto-related laws.
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The current rules already require crypto exchanges to share the information of users with regulators, whenever funds are transferred between firms, to curtain a growing number of illicit activities stemming under the guise of the global cryptocurrency industry.
The SEC will assume any fund managers or advisers who fail to do so are operating businesses without a licence and could be forced to cease operations.
The move mirrors a similar regulatory approach at different jurisdictions, including in Europe, specifically, a pan-European directive, dubbed ‘AMLD5’, brings crypto exchanges and custodian wallet providers within the scope of EU anti-money laundering rules.
The Southeast Asian nation has already taken steps toward the adoption of cryptocurrencies, rolling out regulations and guidelines to welcome the business and opportunities that blockchain brings. Most recently, regulators have issued improvement orders for Bitkub and other Thai cryptocurrency exchanges after users were blocked from trading during significant price spikes in January.