Regulation of the Securities and Exchange Commission of Thailand on the Prohibition of Utility Tokens in Digital Asset Exchanges registered in Thailand


Over the past few years, investors in Thailand are turning their attentions more and more to the digital asset and cryptocurrency market, especially the younger generation. In such regard and due to the fact that such market is continually growing, there are an ever-increasing amount of transactions. Consequently, in order to offer better protection to investors, the Securities and Exchange Commission of Thailand (“SEC”) is giving their utmost effort to regulate the appropriate laws and give guidance to protect people’s investments in cryptocurrency.

Ms. Ruenvadee Suwanmongkol, Secretary-General of the SEC, declared that the SEC’s board meeting No. 12 /2564 (2021), held on 9 June 2021, resolved to launch the SEC Notification No. KorThor. 18/2564 (2021) re: Criterion, Conditions and Measures for Digital Asset Business (No. 11) (“Notification”), which was issued as a Royal Decree and came into effect as of 11 June 2564 (2021), which is ex post facto.

This Notification prohibits the Digital Asset Exchange from rendering a service on utility tokens or cryptocurrencies which fall under one of the following characteristics; to be exchanged via a Digital Asset Exchange registered in Thailand:

(1) Meme Token;

According to the SEC official, a meme coin or token generally mean the coin or token which has no clear information. Further, it may somehow imply themed around Internet memes; jokes and images shared on social media and  the price of such token depends on the trend of social media influence. The example is such as Dogecoin or any coin which is displayed using an animal sign.

(2) Fan Token;

A Fan Token is a digital asset that represents the ownership of a voting right and gives the owner access to earn unique club-specific rewards and experiences. Fan Tokens are fungible, meaning that like other cryptocurrencies, they can be exchanged for other 'goods', such as VIP experiences, exclusive merchandise and tickets, e.g. fan tokens via the blockchain-based platform for top football clubs such as AC Milan, Juventus, AS Roma, Paris Saint-Germain and FC Barcelona.

(3) Non-Fungible Token;

A non-fungible token (NFT) is a unit of data stored on a digital ledger, called a blockchain, which certifies a digital asset to be unique and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files, such as Beeple’s Everydays: The First 5000 Days”, which is the first purely NFT digital artwork that was auctioned at a major auction house - for $69 million; and Jack Dorsey's first-ever tweet, which sold for nearly $3 million as an NFT.

(4) Digital token issued by the Digital Asset Exchange itself or related person of such exchange for the purpose of conducting a transaction upon the blockchain.

An example of this type of coin is Bitkub Coin (KUB), which is a Native Coin that is utility coin on Bitkub Chain.

Furthermore, the SEC also dictates that a Digital Asset Exchange must regulate its policy to have the token issuer abide by the white paper and criteria related to the material aspect, in the case where the digital token issued by such Exchange or related person of the Exchange. Failing which, there shall be the cause for the revocation from the Exchange.

In such regard, the Digital Asset Exchange registered in Thailand shall comply with such Notification and conduct revision upon its listing rule of such exchange to be in accordance with the Notification within 30 days from the date of its enforcement.

Nevertheless, the definition of Meme Token and Fan Token is still ambiguous because most of the tokens and coins in the Digital Asset Exchange are influenced by social media and are sensitive to fluctuations. The SEC then further advised verbally that the consideration on which tokens and coins will be regarded as a Meme Token under this Notification shall be further consulted and discussed with the SEC for clarification.

This is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or on other areas of law, please do not hesitate to contact:

Nuttaros Tangprasitti

Natrada Ruangwuttitikul

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