After initially seeking to ban Bitcoin in 2013, Thailand has since developed a permissive regulatory apparatus for digital currencies and cryptocurrency fundraising methods. Thai financial services firm Seamico Securities recently announced that it has received approval from the country’s Securities and Investments Commission (SEC) to operate its subsidiary, SE Digital, as a regulated initial coin offering (ICO) portal.

In doing so, SE Digital obtained permission to launch the first legitimate ICO in Thailand, with the company announcing that it hopes to raise between 2 billion and 3 billion Thai baht (between around $66 million and $99 million) through the token sale.

Jesadavat Priebjrivat, the CEO of SE Digital, described the approval of the country’s first ICO portal as turning a “new page on Thailand’s capital market history,” adding that Thailand “will become one of the first nations in [The Association of Southeast Asian Nations] to offer regulated digital token offerings.”

Elevated Returns seeks to facilitate secondary trading

While SE Digital will facilitate the issuance of ICO tokens, the company will not directly host markets for traders to speculate on the crypto assets. Seamico’s strategic investor, Elevated Returns — a financial group that tokenizes traditional assets — plans to launch an exchange facilitating secondary trading of SE Digital’s digital tokens. The company has already announced that its subsidiary, ERX, has applied for Digital Assets Exchange License with a plan to launch operations before the second half of 2020.

Stephane de Baets, the founder and president of Elevated Returns, took to Twitter to express his hopes for a pan-Asian expansion of Seamico’s ICO services in coming years, citing Taiwan, Korea, Japan, the Philippines, Indonesia and Singapore as jurisdictions that Seamico may target after further establishing its operations in Thailand.

Elevated Returns previously issued the Aspencoin security token during August 2018, with Aspencoin’s security token offering (STO) being described then as among the first of its kind.

Elevated Returns acquired 21% of Seamico, worth 467.1 million baht (approximately $15.4 million), during the third quarter of 2018 amid expansions designed to facilitate the launch of $1 billion worth of tokenized real estate on Tezos. During March of this year, Elevated Returns revealed that it hoped to launch $100 million worth of true estate tokens in Thailand by 2020.

SE Digital to offer suite of ICO services

SE Digital is seeking to offer a complete range of digital token offering services, including primary issuance, strategic advisory, facilitating secondary market access, and providing Know Your Customer (KYC) and Anti-Money Laundering (AML) services. SE Digital will target Thai retail investors, institutional investors, venture capital firms and private equity funds.

With digital tokens comprising a new market in Thailand, SE Digital is preparing educational programs in cooperation with partners and regulators. As digital tokens are new to most Thai investors and its market, SE Digital plans a series of educational programs through cooperation with its local partners, regulators and leading organizations. Stephen Ng, chief marketing officer of SE Digital, stated, “As asset tokenization fully takes hold, it will help bolster innovation and competitiveness of Thailand’s capital markets.”

Thailand introduces ICO regulations in 2018

Thailand’s ICO sector has matured significantly since the start of 2018. On Jan. 17, 2018, Bangkok Post reported that J Ventures, a subsidiary of mobile accessories firm Jaymart, was readying to become the first Thai company listed on the Stock Exchange of Thailand.

The company was looking to conduct an ICO to distribute 100 million of its “JFin” cryptocurrency — a utility token set to power J Ventures’ lending platform — with a total supply of 300 million tokens. As of this writing, J Ventures has not conducted the final phase of its token offering.

Related: Thailand Is Opening Up to Crypto, One Step Closer to ICO and STO

On Jan. 22, 2018, the Thai SEC completed the final round of public hearings relating to its then-proposed regulatory framework for ICOs. On Feb. 14, 2018, J Ventures launched the presale of its ICO, selling 87% of the 100 million tokens on the first day before later selling out. J Ventures raised approximately 660 million baht ($21.8 million), which priced JFin at approximately $0.22 each.

During the presale, JFin could only be purchased via the Thai Digital Asset Exchange (TDAX) for fiat currency and was exclusively available to identity-verified investors. On Feb. 26, TDAX announced that it had halted the registration and trading of new ICOs as it waited for the SEC to establish a regulatory framework governing digital token sales.

Zmine Holdings conducts ICO in Thailand

While many ICOs were still awaiting further guidance from the Thai SEC, Zmine sought to follow in J Ventures’ footsteps and conduct a token offering despite the lack of regulatory clarity. Zmine also conducted both a presale and private sale during the first quarter of 2018, with the company planning to finance an expansion of its mining operations through an ICO.

At the end of May, Zmine Holdings Limited launched a public token sale, seeking to raise 180 million baht ($5.6 million) by issuing 100 million “ZMN” tokens. During its first day, the ZMN ICO sold 2 million tokens and raised 3.5 million baht (roughly $110,000).

Thai cabinet introduces preliminary crypto regulations

March 2018 saw Thailand’s cabinet approve a draft decree to go into effect as of May 14 that provides oversight for companies operating with cryptocurrencies or ICOs. The decree required that crypto businesses obtain relevant licensing and report to AML authorities, and tasked the Thai SEC with regulating the sector.

The regulations also mandated that ICOs be issued exclusively via a licensed “ICO portal” — a platform that screens and assists prospective ICOs in launching fundraising activities for crypto assets in a regulated and compliant fashion. The legislation stated that ICO portals must comprise licensed Thai-based companies with a minimum registered capital of 5 million baht ($155,000).

The decree also outlined the tax obligations of retail traders, mandating a 7% value added tax payment on top of the 15% withholding tax on capital gains and returns from crypto investments. Thailand’s finance minister, Apisak Tantivorawong, stated at the time:

“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, and other digital asset-related translations, but to protect investors.”

JFin tokens begin trading on local exchanges

In May, JFin began trading on the Thai exchange Coin Asset, with prices quickly plummeting by 57% before temporarily retaking half of its losses. Within one month, JFin was trading at just a third of its ICO price. JFin investors’ losses prompted analysts to caution prospective ICO participants.

Thai SEC introduces ICO regulations

At the start of June 2018, the SEC unveiled its regulatory framework for cryptocurrencies and ICOs. The regulations would see seven crypto assets permitted to be used as trading pairs for ICO tokens — Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Ethereum Classic (ETC), Litecoin (LTC), XRP and Lumens (XLM). The SEC stated that the seven cryptocurrencies were chosen due to each of the assets garnering significant trade volume and lacking advanced privacy features.

ICOs would need to pay fees of 5 million baht (roughly $165,000) upfront for token distribution and cryptocurrency operation, while the application fees for brokerage firms and crypto asset dealers were set at 2.5 million baht ($82.500) and 2 million baht ($66,000), respectively.

Exchanges are also required to pay fees equal to 0.002% of annual trade volume up to 20 million baht ($625,000), whereas crypto brokers must pay annual fees of 0.001% of trade volume up to 5 million baht ($155,000).

While no limits are placed on institutional and high-net-worth investors’ participation in registered ICOs, retail investors can invest a maximum of 300,000 baht ($9,905) per ICO — with ICOs permitted to raise no more than 70% of their capital from retail investors.

Issuers of unlicensed crypto assets can face fines of up to twice the value of the token sale, with minimum penalties starting at 500 million baht ($15,600), in addition to risking a jail term of up to two years.

Thai SEC clarifies ICO portal regulations

In July 2018, the Thai SEC clarified the regulatory processes relating to ICO portals. In addition to comprising Thai-based companies with a minimum registered capital of 5 million baht ($165,000), prospective ICO portals are required to demonstrate readiness to adhere to compliance and security protocols recommended by the SEC. ICO portals were also told to pay an annual fee of 100,000 baht ($3,300).

An additional prerequisite is that the executives, directors and shareholders of an ICO portal cannot have previously been declared bankrupt, and any subsidiaries must be related to the portal. ICO portals were also tasked with providing preliminary product screening for prospective token offerings.

Within one month, the Thai SEC reported that 50 ICO issuers had expressed an interest in applying for licenses, while three of the five prospective ICO portals had submitted applications. Twenty firms had also applied for digital asset exchange licenses. After initially examining the applications, the SEC then forwards the documentation onto Thailand’s Finance Ministry, which makes the final ruling.

ICO scams target Thailand

Despite the Thai government’s efforts to legitimize and regulate the country’s cryptocurrency and ICO sector, the SEC reported an increase in crypto-related scams during the second half of 2018.

In October, the SEC warned the public of four unauthorized token offerings targeting Thai investors — the G2S Expert ICO, the Singhcom Enterprise ICO, the Adventure hostel Bangkok ICO and the Kidstocurrency ICO. The SEC also warned of five scams operating under the guise of cryptocurrency investment opportunities — Every Coin, Orientum Coin, Tripxchain Coin, TUC Coin, and OneCoin and OFC Coin.

The warning came just weeks after Thai citizen Prinya Jaravijit was arrested in a Bangkok airport for defrauding a Finnish investor of $25 million worth of BTC. Alongside six other associates, Jaravijit had allegedly persuaded the businessman to invest in a fraudulent scheme purportedly involving three companies and Dragon Coin (DRG).

Thai regulators teased licensed ICO portal 12 months ago

At the start of November 2018, the Thai SEC claimed that it would clear “at least one” ICO portal to operate legitimately before the end of the month. While the approval of an ICO portal would not be announced until March of the following year, late 2018 saw the Thai regulator move to make permissive adjustments to the country’s regulatory apparatus covering cryptocurrencies and ICOs.

During December, the Thai SEC announced that it would seek to reduce the legislative “barrier” faced by ICOs. The new rules would relax the regulations surrounding ICO presales and private sales, removing the need for token offerings that exclusively offer private sales and presales to accredited investors to submit registration statements and a draft prospectus with the SEC.

Tipsuda Thavaramara, the SEC’s deputy secretary-general, stated, “The proposed guideline is an attempt to find greater equilibrium in the regulatory process and reduce regulatory impediments, while taking risk management and investor protection into account.”

Thailand pushes permissive crypto regulations during 2019

January 2019 saw the Thai SEC grant cryptocurrency licenses to four cryptocurrency firms. The authorized companies comprised crypto exchanges Bitcoin Exchange Co., Bitkub Online Co. and Satang Corporation, as well as digital currency broker-dealer Coins TH.

The following month, Thailand’s National Legislative Assembly passed an amendment to the country’s Securities and Exchange Act, legitimizing the issuance of securities via distributed ledger technology — paving the way for STOs in the country.

March saw further refining of Thai crypto regulations, with the SEC removing BCH, ETC and LTC from the list of crypto assets authorized to comprise pairings for token offerings. Two weeks later, the Stock Exchange of Thailand announced that it is planning on building a digital asset platform to “digitize” its “capital market infrastructure.”

On March 13, the SEC announced that it had approved the country’s first ICO portal, however, the application was still awaiting approval from other regulatory entities, such as the Commerce Ministry.