Faced with the rapid adoption of cryptocurrencies and the growing need for regulation in the respective regions, Thai financial regulators announced on August 9 the launch of a “regulatory sandbox” designed to “test and refine” cryptocurrency services.
The launch of this regulatory sandbox comes in the context of the country’s Securities and Exchange Commission’s (SEC) phased-in approach, which began earlier this year. The announcement noted:
In early March, the SEC Board of Directors adopted a resolution approving in principle the creation of the Digital Asset Regulatory Sandbox. Later in May, the SEC held a public hearing on the issue to gather comments and suggestions from the public and stakeholders. Most respondents approved of the principles and proposed changes to the existing regulations.
The regulator added that following these steps will come the publication of “regulations determining the characteristics of eligible services, the qualifications of participants and the scope of Sandbox experiments.”
Digging Deep into the Sandbox Initiative
The cryptocurrency regulatory sandbox launched by the Thai SEC earlier today is not only seen as a response to global interest in digital assets and their “transformative” potential for the financial sector, but also serves as an “experimental” framework for companies to pilot their cryptocurrency-related services without the immediate pressure of full regulatory compliance.
In the announcement, the SEC noted that the sandbox is open for applications starting today, encouraging digital asset innovators to participate.
According to the SEC, in addition to being a testing ground, the regulatory sounding board would also promote “innovative development in the capital market within a flexible regulatory framework.”
The SEC also set specific rules for the sandbox. These include participant eligibility criteria and the scope of permitted experiments.
Additionally, services eligible for testing include various digital asset businesses such as exchanges, brokers, dealers, fund managers, advisors, and custody wallet providers.
Participants must also clearly define the scope of their services to mitigate potential risks. Sandbox trials cannot last longer than one year from the date of approval, with provisions for possible extensions if necessary.
Thailand’s Position on Cryptocurrencies
So far, Thailand’s stance on cryptocurrencies has been more favorable than other regions. Before the emergence of the crypto regulatory sandbox, the country has since tried to be more friendly in its approach to the crypto market.
In February, Thailand’s Finance Ministry scrapped value-added tax (VAT) on crypto-asset transactions, a move “to push Thailand toward becoming a digital asset hub.”
The Finance Ministry has announced the VAT exemption on digital asset transactions to boost capital mobilization through digital assets, with the aim of making Thailand a regional digital asset hub, said Paopoom Rojanasakul, secretary to the finance minister. #ThaiPBSWorld #Thailand #VAT
— Thai PBS World (@ThaiPBSWorld) February 6, 2024
Featured image created with DALL-E, chart by TradingView
