Crypto License in Thailand

The crypto license in Thailand, also called the Digital Asset Business Operator license, is one of the oldest cryptocurrency business authorizations. It was created in 2018 with the passing of the Emergency Decree on Digital Asset Businesses, also referred to as the Royal Decree.

The supervisor of the framework is the Ministry of Finance itself, with the active support of the Securities and Exchange Commission (SEC) of Thailand. Crypto companies in Thailand shall register directly with the Ministry of Finance.

To obtain a crypto exchange license in Thailand, a project must establish itself in Thailand. A legal entity has to be formed, and the place of business must be in Thailand, meaning that the company should have office spaces and employees pertaining to the activity.

AML-KYC legislations in Thailand are among the strictest for a crypto license. The framework relies on the Anti-Money Laundering Act of 1999 and the notifications and guidelines issued by the Ministry of Finance, the Securities and Exchange Commission, and the Office of the SEC. It stands to say that crypto companies in Thailand are considered financial institutions, meaning that they are required to meet a very high standard of compliance and due diligence.

Cryptocurrency is not considered legal tender in Thailand.

The process to obtain a crypto license in Thailand can take 6 to 9 months at a minimum, under the condition that the numerous forms and supporting documents are provided in a very short period of time.

The process begins with the necessary formation of a company in Thailand. This company must rent or own an actual office space in Thailand and hire the relevant amount of personnel, including an AML officer. The founders and shareholders must be disclosed and approved by the regulatory authorities.

A bank account shall be opened right after the incorporation in order to deposit the minimum legal share capital (50 million Thailand Baht).

The crypto project must then proceed to document its operations and intended services to be provided, with the support of numerous forms provided in the Thai language by the SEC. A Thai speaker is strongly advised to apply for the crypto license in Thailand.

There are 9 types of cryptocurrency activities that are legal in Thailand and subject to licensing. All the types of licenses in Thailand are referred to as being part of the digital asset business operator framework.

The three main digital asset business licenses are:

• Digital asset exchange: a trading or exchange platform, through a matching order system or equivalent solution;
• Digital asset broker: brokerage service to trade or exchange digital assets;
• Digital asset dealer: required for any crypto company willing to perform crypto trading itself.

Six other crypto-related activities are possible to perform within the scope of the crypto license in Thailand:

• Fund Manager
• Advisory Service
• Custo​dial Wallet Provider ​
• ICO Portal​​
• Auditor
• ICO Issuer

These activities have slightly different requirements and lower financial demands from the supervisor.

The legality of the cryptocurrency business in Thailand

Cryptocurrency business in Thailand has been made legal by a Royal Decree in 2018. The Emergency Decree on Digital Asset Business provides the basis of the crypto license in Thailand and the framework to get regulated in the Southeast Asian country.

The legality of the cryptocurrency business in Thailand is tied to numerous requirements and obligations. A company willing to offer crypto services with a license in Thailand must register as a digital asset business under the Royal Decree.

There are three types of crypto activities that are legally allowed in Thailand:

• Digital Asset Exchange;
• Digital Asset Broker;
• Digital Asset Dealer.

The legality of the operation depends on getting a license from the Ministry of Finance of the Kingdom of Thailand. This Ministry is directly responsible for the regulation of crypto companies in Thailand, with the assistance and support of the Securities and Exchange Commission of Thailand (SEC).

Cryptocurrency regulation in Thailand

The cryptocurrency regulation in Thailand is rather heavy, with dozens of guidelines and notifications from the Ministry of Finance and the Securities and Exchange Commission forming a strongly documented and regulated crypto framework.

The core basis of the framework is the Emergency Decree on Digital Asset Business of 2018.

Additionally, the Royal Decree on Digital Asset Business imposes the consideration of digital asset businesses as “financial institutions”. This way, they are also directly regulated by the Anti-Money Laundering Act of 1999.

In July 2022, the SEC issued an additional set of regulations and licensing conditions for Digital-Asset Custodial Wallet Service Providers, which was accepted by the Ministry of Finance. Under these regulations, a DA Custodial Wallet Service Provider is any registered entity that can store digital assets and manage customers’ digital assets on their behalf.

Obtaining a VASP license in Thailand requires the full acknowledgement of the whole regulatory framework. Compliance with all the expectations set by the Ministry of Finance and SEC.

Thailand Virtual Cryptocurrency Registry

The website of the Securities and Exchange Commission of Thailand publishes the virtual registry of cryptocurrency companies with a license. The registry lists all the legal entities that have successfully secured a crypto license in Thailand.

The crypto-licensed companies are sorted by activities: exchanges, brokers, dealers, fund managers, custodial wallet providers, ICO issuers, auditors, advisory services, and ICO portals.

Information about the license holders is shown in the registry as it is publicly available. Companies with a crypto license in Thailand are all presented on the website of the regulator.

Crypto-authorization process in the Thailand Virtual Currency Registry

The crypto authorization process to register a company in the Thailand virtual currency registry involves the creation of a company in Thailand and the preparation of an application to become a digital asset business operator.

There are an important number of forms and information to provide to the regulator at the application stage. Once all the information is gathered, the SEC will review the application for a duration of approximately 5 months.

The registration of Thailand Company in the Register of cryptocurrency companies

Registering a Thai company in the register of cryptocurrency companies is all about carefully preparing the required documents, forms, and compliance items expected by the regulatory authorities.

Most of the forms to be filled by the applicant are only available in the Thai language, meaning that the company, once formed in Thailand, must have Thai-speaking personnel.

It is also relevant given the fact that the legal framework is strict and defined by a growing number of notifications issued by the Ministry of Finance, the Securities and Exchange Commission, and the Office of the SEC. These notifications are not always translated into English.

This fact underlines the importance of establishing an actual presence in Thailand in order to get the license and run a cryptocurrency business.

Governmental Statements on Crypto in Thailand

The fundamental law of the cryptocurrency license in Thailand is called the Royal Decree because it has been proclaimed by His Majesty King Maha Vajiralongkorn Bodindradebayavarangkun, Monarch of Thailand.

When the crypto law has been proclaimed by the King of the country in person, there is little doubt that the Kingdom of Thailand is positive on the topic of crypto. The goal of the Royal Decree is to create and sustain an ecosystem of crypto businesses in Thailand.

Since the passing of this law, many companies have registered as crypto businesses in Thailand.

Requirements for companies engaged in crypto activities in Thailand

There are many requirements for a company willing to engage in crypto activities in Thailand. It begins with establishing a legal entity in Thailand, and then it must comply with numerous requirements before preparing an application.

The incorporation of a company in Thailand is mandatory, as the crypto license can only be provided for a domestic company. The Ministry of Finance will not accept foreign applications.

The minimum share capital required to be deposited in the Thai bank account for a crypto company applicant is 50 million THB (approximately 1.4 million USD), but the company will also need to demonstrate the availability of a similar amount for its operational expenses. The approved operator must have adequate sources of capital to cover business operations and several risks.

The application should be carried out with a strong case of documents, consisting of many forms provided by the regulators, as well as supporting evidence of the business model, IT infrastructure, records and safety of clients’ assets, founders’ fitness & property, etc.

A Thai crypto-licensed company must demonstrate appropriate accounting systems for its business and contract with an auditor that has been approved by the SEC office.

All the AML-CFT policies and procedures, Know Your Client (KYC) measures, due diligence processes, and risk assessments will be scrutinized during the application process.

The process of setting up a company for a cryptocurrency business in Thailand

When preparing a cryptocurrency business, it is important to set up a company in Thailand with the requirements in mind. This means that the company cannot be a simple legal entity. It must have economic substance in Thailand, local employees, a physical office space with furniture, accountants, auditors, a bank account with the required capital, etc.

This process of incorporation must not be overlooked, as the Thai SEC is very demanding on the quality of the corporate structure of the applicants for the crypto license in Thailand.

The legal entity registration itself is a straightforward procedure, where the founders disclose their identity documents and business model in order to form a corporation in Thailand.

Taxation for cryptocurrency companies in Thailand

In Thailand, cryptocurrency companies are subject to taxation. Their profits are taxed at the standard corporate tax rate, which is 20%.

In 2022, Thailand introduced a specific taxation framework for the proceeds of cryptocurrency trading and holding. Equating a capital gains tax, profits generated from cryptocurrency are taxed 15% in Thailand.

Dividends sent by a Thailand cryptocurrency company to a shareholder based outside of Thailand are taxed 10% to 15% depending on the situation and citizenship. Consulting with a tax lawyer in Thailand is advised.

Obligations for crypto companies in Thailand

Crypto companies licensed in Thailand must respect strict obligations at all times. Every rule and regulation that applied for registering and getting the license continues to apply once the crypto license is granted.

The digital asset business operator in Thailand has the obligation to maintain its clients’ assets segregated from its own, with a separate account for each client and a high level of protection in terms of cybersecurity and data privacy.

Every year, the cryptocurrency business must disclose its annual financial statements and receive an examination and opinion from four different auditors of the SEC. The financial means of the company will be assessed in order to determine if the crypto company is sustainable and responds to solvability obligations.

The crypto companies in Thailand are liable to respect a high degree of market integrity. Numerous rules are issued by the Ministry of Finance and the Securities and Exchange Commission in order to prevent market abuse of any kind, both by companies and employees of the crypto sector.

To give a couple of examples on the matter: insider trading and misinformation of the public are strongly prohibited by the obligations for crypto companies in Thailand.

The crypto law in the form of the Royal Decree gives investigative powers over licensees, meaning they must be able to access computer systems and data relative to the operations of the digital asset business operator.

In compliance with the AML-CFT laws, a crypto business in Thailand has the duty to monitor and report transactions to the Office of the SEC in accordance with the rules established in the law and through the various guidelines issued by the regulatory authorities.

Sanctions for violating Thailand crypto-business obligations

The Thailand SEC and Ministry of Finance are dealing with wrongdoers in an unforgiving fashion. The sanctions for violating Thailand crypto business obligations are meant to be dissuasive.

Any infringement of the obligations explained above can result in the suspension or revocation of the crypto license at a minimum. The Royal Decree on Digital Asset Businesses explicitly gives the power to the Ministry of Finance to take any necessary action to protect the interest of clients.

This includes obligations to maintain a healthy financial situation. The share capital, the liquidity, and the financial structure of the company must be in proper condition, else the SEC may warn the licensed company and eventually revoke the license if nothing is done as a consequence.

On the topic of financial wrongdoings within a cryptocurrency company in Thailand, the perpetrator can be liable to up to two years of imprisonment and a fine of a minimum of 50,000 THB (approximately 1,420 USD).

Similar kinds of sanctions, with imprisonment of up to five years, can apply to perpetrators of false statements, omitting the disclosure of facts that should have been communicated and other misinformation.

Operating a crypto business without a license is strongly prohibited and is punishable by imprisonment and a fine of up to 500.000 THB plus 10.000 THB per day of illegal operation.