Thailand’s Securities and Exchange Commission (SEC) plans to amend the royal decree on digital asset businesses next year. The move is aimed at facilitating the growth of digital assets while shielding investors from unnecessary risk.

The regulator is examining the royal decree to determine if there are aspects of it that could hinder the development of digital asset businesses, said Ruenvadee Suwanmongkol, secretary-general of the SEC, the Bangkok Post reported.

“The regulator must be flexible to apply the rules and regulations in line with the market environment,” she said. “For example, laws should not be outdated and should serve market needs, especially for new digital asset products, and be competitive with the global market. We need to explore any possible obstacles.”

The royal decree, which came into force on May 14, 2018, lists four types of secondary business intermediaries: digital exchanges, brokerage firms, dealers and token portal service providers, also known as initial coin offering (ICO) portals.

The decree covers cryptocurrencies, digital tokens, and any other electronic data unit, as specified by the SEC. Exchanges, brokers and dealers must apply for licenses from the Finance Ministry, while ICO portals must be approved by the SEC.

Ruenvadee said many firms are keen to apply to become token digital issuers, but digital tokens and the ICO must be offered to the public through ICO portal companies and all three authorized by the SEC have not begun operations.

“The legislation also aims to protect investors from risk of fraud and deception by dishonest persons, money laundering and exploitation of digital assets to facilitate illegal financial transactions, while ensuring regulatory clarity to facilitate legitimate uses of digital assets,” Rapee Sucharitakul, the former SEC secretary-general, said last year.

Five companies have been awarded digital asset exchange licenses, according to SEC data.

Among the five, Bitkub Online Co Ltd and Satang Pro Corporation are operating. Bitcoin Co decided to shut down its digital asset exchange in Thailand in August, and two other companies – Bitherb Co Ltd (bitherb.net) and Huobi Thailand Co Ltd – have not begun operations.

For digital asset brokers, the SEC has authorized licenses to three companies, Coin TH Co Ltd, bitherb.net and Bitazza Co Ltd. The latter two have not launched commercial services.

Coin TH Co Ltd is the only digital asset dealer to win SEC approval.

The list of ICO portal companies already approved by the SEC includes three companies – Longroot Thailand Co Ltd, T-BOX Thailand Co and SE Digital Company Ltd.

As per the royal decree, sellers of unauthorized digital tokens and those setting up unauthorized seminars to solicit cryptocurrency investment will be fined no more than twice the value of the digital transaction or at least 500,000 baht. They could also face a jail term of up to two years.

Investors who make digital asset-related trades will be liable for a 7% value-added tax (VAT) payment, on top of the 15% withholding tax on capital gains and returns from such investments.

Retail investors will be exempt from VAT if they trade digital assets through exchanges. Those who have no capital gains will only pay VAT. But investors will be required to pay VAT if their trades produce no capital gains.