Dissecting the tighter regulations on cryptocurrency advertising implemented by the Thai SEC – Lexology

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The Securities and Exchange Commission of Thailand, acting through its authority under the Emergency Decree on Digital Asset Businesses of 2018, issued Notification No. KorThor 19/2565 Re: Rules, Conditions, and Procedures for Operating a Digital Asset Business (No. 17) on 18 August 2022 which revises the rules applicable to the employment of “introducing broker agents” and cryptocurrency advertising by digital asset business operators in Thailand. A summary of the rules, which are effective 1 September 2022, is as follows:
Introducing Broker Agents
The regulations define an “introducing broker agent” as a “natural person or juristic person who recommends customers to digital asset operators in relation to the digital asset business, or who performs the duties of soliciting customers to engage the services of the digital asset business operator in relation to the digital asset business, regardless of whether the act of recommending or soliciting customers is done for compensation.” The previous regulations allowed digital asset business operators to employ introducing broker agents only if the digital asset business operator restricted such agents from engaging in any of the following activities:
Furthermore, the previous regulations required digital asset business operators to supervise introducing broker agents to ensure that such agents acted within the above scope of restrictions and only imparted accurate information to customers. The rates of any compensation paid to introducing broker agents also had to be clearly defined and disclosed.
The new regulations keep the previous set of rules intact but allows digital asset business operators to employ introducing broker agents only with regards to services relating to digital tokens. Under the framework of the Emergency Decree of 2018, a “digital token” is distinguished from a “cryptocurrency” in that a digital token refers to an electronic data unit that defines rights to participate in an investment project or the rights to receive goods or services. Therefore, a digital token would be equivalent to either a “security token” or a “utility token” as the terms are used in the global ICO parlance. On the other hand, a cryptocurrency is defined as an electronic data unit that merely operates as a medium of exchange. The distinction between a digital token and a cryptocurrency is an important theme recurring in the Thai regulatory framework.
Advertising
A comparison of the regulations applicable to cryptocurrency advertising by digital asset business operators under the previous regulations (KorThor. 19/2561 and KorThor. 29/2563) and new regulations (KorThor. 19/2565) may be summarized as follows:
 
Advertising that was educational or informative regarding digital assets, investment, services, and the distribution of prospectuses for the offering of digital tokens were exempt from regulations.
 
The distribution of prospectuses for the offering of digital tokens are exempt from regulations.
 
Advertising that is educational or informative regarding digital assets, investment, and services, or the dissemination of investment analyses for decision-making purposes by investors that that do not solicit or induce the investor to engage the services of a digital asset business operator must not be false, exaggerated, opaque, or give rise to misunderstandings. However, such advertisements are otherwise exempt from the overall rules stipulated in the regulations.
 
 
 
 
 
 
·      Notification to be made after-the-fact for any advertisements in the form of interviews
 
·      For all other forms, notification to be made 10 days in advance and may only be advertised if the SEC does not respond within the aforementioned period.
 
 
 
 
Advertising content was required to contain risk warnings with regards to investment in digital assets, and to indicate a location where further information could be obtained.
 
Any advertisement contained in a prospectus for the offering of digital tokens before the date that such prospectus had legal force must have otherwise been lawful as according to the regulations.
 
 
 
 
 
 
 
Digital asset operators that have existing advertisements before the new regulation was issued are given 30 days from 1 September 2022 to comply with the new regulations.
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