Thailand has now developed a clear outline of its upcoming regulation on cryptocurrencies and ICOs, with a draft royal decree which is setting out to regulate all forms of digital assets.
The draft outline has removed a previous definition of digital assets as incorporating electronic data and has now put forward a new legal definition that places cryptocurrencies at its core.
The royal decree now grants regulators a free hand to develop a new framework of laws which is expected to be enacted by the end of April. Under the new laws, all exchanges and dealers engaging in trade in digital assets will have to register with the relevant authorities.
In the meantime, ICOs have now been given 90 days to register with the SEC (Securities and Exchange Commission) and inform the body of their plans.
Thailand’s military regime have also outlined plans to tax cryptocurrencies and digital tokens. Investors will have to pay a 7 percent VAT (Value-Added Tax) on digital asset trades and will be subject to a 15 percent withholding tax on capital gains.
A spokesperson for the SEC said that while it wanted to protect investors, it didn’t want to drive ICOs out of the country nor underground.
However, if the Thai authorities sincerely want to promote a culture of blockchain innovation, they may need to rethink the VAT proposal. Charging VAT on the purchase or sale of financial assets is almost unheard of in any country. If the government does go ahead with the proposed 7 percent VAT rate, Thailand will immediately be at a disadvantage in attracting blockchain projects.
Most analysts at this stage appear to concur that the plan, in its current form, will simply strengthen Singapore’s position as the crypto hub of Asia.