The document provides an overview of ICOs (Initial Coin Offerings) of digital tokens in Thailand, including: 1) Key requirements for conducting an ICO such as SEC approval, qualifications of the issuer, characteristics of the digital tokens, and restrictions on investors. 2) The process an issuer must go through including preliminary disclosure, registration statement approval, and post-ICO reporting. 3) Other legal and regulatory updates regarding digital assets in Thailand such as recognized cryptocurrencies, granted digital asset business licenses, and withholding tax requirements.

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ICO: A DIGITAL CORPORATE FINANCING TOOL
FUND RAISING BY ICO OF DIGITAL TOKENS
Kowit Somwaiya
Managing Partner
LawPlus Ltd.
19 June 2019
Corporate Finance Laws 2019
OmegaWorldClass Research Institute

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The information provided in this document is general in nature and may not
apply to any specific situation. Specific advice should be sought before taking
any action based on the information provided. Under no circumstances shall
LawPlus Ltd. or any of its directors, partners and lawyers be liable for any
direct or indirect, incidental or consequential loss or damage that results from
the use of or the reliance upon the information contained in this document.
Copyright © 2019 LawPlus Ltd.

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Kowit Somwaiya
• Managing Partner, LawPlus Ltd.
• Managing Partner, LawPlus Myanmar Ltd.
• Board of Directors, INTA
• Anti-Counterfeiting Committee, APAA
• B.A. (Education – English), Ubon Ratchathani Rajbhat University
• LL.B., Thammasat University
• LL.M., University of Illinois
• Certificate of Instruction for Lawyers, Harvard Law School

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• Professional, Practical, Prompt, Pro-active
• Established in 2003
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• www.lawplusltd.com

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Presentation Points
 Digital Asset Law Update
 Cryptocurrencies, Digital Tokens and Other Digital Assets
 Launching ICO of Digital Tokens
 Report and Filing after ICO Launching
 Withholding Tax
 ICO Portal
 Digital Asset Licenses (Exchange, Brokerage, Dealer)

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Digital Asset Law Update
Emergency Decree
 Name: Digital Asset Business Operation Emergency Decree B.E. 2561 (A.D. 2018)
 Enactment Date: 13th May 2018
 Effective Date: On and from 14th May 2018
 Objectives:
- Regulate and control digital assets business
- Support technology for development of economy and society
- Prevent public fraud and criminal offences
 Authorities in Charge:
- Ministry of Finance (“MOF”)
- Securities and Exchange Commission (“SEC”)
 Sanctions:
- Criminal penalties
- Civil liabilities
 Implementation Rules as of May 2019:
- 3 MOF notifications
- 12 SEC notifications
- 9 SEC Office notifications

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Digital Asset Law Update
Key Provisions of Implementation Rules
 Requirements and procedures for digital asset business operation licenses, ICO, ICO Portal
 Exemption of digital asset law application for some types of digital tokens
 SEC Office approval for digital asset business operator with major shareholders as prescribed
by the MOF
 Exclusion of services which are not digital asset business operations
 Minimum registered capital for each type of digital asset business operators
 Prohibited characteristics of directors, managers or other authorized persons
 Terms and conditions and procedures for operating digital asset businesses
 Requirements and procedures for appointment of directors, executives and auditors of digital
asset business operators
 Information management and retention related to digital asset business operation
 Cryptocurrencies allowed by the SEC to be used as medium of exchange and tender of legal
transactions

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Digital Law Update
Recognized Cryptocurrencies
 As of 16th February 2019, only four cryptocurrencies are allowed by the SEC to be used for
ICO investment/transactions or as a base trading pair:-
(1) Bitcoin
(2) Ethereum
(3) Ripple
(4) Stellar
However, the SEC does not certify their legal tender status.
 The SEC has removed Bitcoin Cash, Ethereum Classic and Litecoin from the list of
cryptocurrencies for ICO investment/transactions or base trading pair.
 As of June 2019, three ICO Portals have been approved by the SEC. But none of them
has started operating business.
 As of June 2019, no ICO approval has been granted.

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Digital Asset Law Update
Digital Asset Business Licenses Granted
 As of June 2019, 5 digital asset business licenses were issued by the MOF.
 The MOF rejected some applicants for obtaining digital asset business licenses because
their major systems, such as asset custody system, KYC system, IT security and cyber
security system, do not meet the requirements of the SEC and the AMLO.
Operator Website Type of License
Bitcoin Co., Ltd. bx.in.th Exchange License
(for cryptocurrencies and digital tokens)
Bitkub Online Co., Ltd. bitkub.com Exchange License
(for cryptocurrencies and digital tokens)
Satang Corporation Co., Ltd. satang.co Exchange License
(for cryptocurrencies and digital tokens)
Coins TH Co., Ltd. coins.co.th Dealer License and Broker License
(only for cryptocurrencies)

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Digital Assets: Cryptocurrency
 Unit of electronic information created in an electronic system or an
electronic network
 Used as a medium for exchange of goods, services or other rights
through a medium of exchange between digital assets
 Unit of other electronic information to be determined by the SEC
 Examples: Bitcoin, Ethereum, Litecoin, Ripple, etc.

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Digital Assets: Digital Tokens
 Unit of electronic information created in an electronic system or an
electronic network
 Objectives of digital tokens:
(1) determining rights of a person who invests in any project or activity
(2) determining rights of a person to acquire goods, services or other rights as
determined by the SEC pursuant to an agreement between the issuer and the
holder of the digital token
(3) determining any other right to be determined by the SEC.
 Examples:

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Digital Assets: Other Types of Digital Assets
 Cryptocurrencies are deemed digital tokens if they
a) are issued for raising funds from the public and
b) create (i) rights to jointly invest in any project or activity or (ii) rights to
acquire goods or services or other rights.
 The SEC may later recognize other types of electronic information as
digital assets.
 Securities under the securities law are not a digital asset.

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ICO of Digital Tokens
Basic Requirements and Procedures
 Only ICO of digital token is allowed.
 Approval from the SEC Office is required.
 ICO can be offered to only the investors prescribed by the SEC:-
(1) Institutional investors
(2) Individuals with ultra high net worth
(2) Venture capital funds or private equity funds
(3) Retail investors (with maximum investment of THB300,000 each per ICO but not to exceed 4
times of the shareholders’ equity of the issuer or 70% of the total offering amount of the ICO)
 ICO can be made only with advice of ICO portal licensed by the SEC.
 ICO can be offered only after the registration statement and the draft prospectus/whitepaper have
been approved by the SEC Office.
 Disclosure of accurate, complete and sufficient information without misleading information for
investors to make investment decision must be made to investors.
 Sales and subscription must be completed within 6 months from the SEC Office approval date
(extendable up to 6 months).

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ICO of Digital Tokens - Qualifications of Issuer
 Being a private or public limited company registered in
Thailand.
 Not being bankrupt, insolvent or under rehabilitation or
rehabilitation proceedings under the bankruptcy law.
 Directors, managers or other authorized persons not having
prohibited characteristics specified by the SEC
 Proposed ICO having been reviewed by an SEC licensed
ICO portal and found to have fully complied with the
applicable regulations.
 Audited financial statements and consolidated financial
statements (if any) having been prepared and audited in
accordance with the generally accepted accounting and
auditing principles.
 Not having been involved with any illegal business, violation
of or noncompliance with regulations on offerings of
securities and/or digital tokens.

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ICO of Digital Tokens - Required Characteristics of Digital
Tokens
 Must be identified and clarified as investment tokens or utility tokens.
 Must have a clear and explicit business plan with:-
- objectives, goals and business model of the project
- explicit rules on rights of digital token holders
- terms and conditions for amendment of rights of holders and measures for maintenance of
such rights.
 Business plan for issuing the digital tokens and mechanism for granting rights to investors
through a smart contract must be free from suspicion of being unenforceable or taking
advantages of investors.
 Source code of the smart contract must be created and disclosed in accordance with the
guidelines specified by the SEC.

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ICO of Digital Tokens - Timeline
(1) Preliminary
disclosure
of
information
(2) Disclosure
of latest
registration
statement
Request for
the
registration
statement
to become
effective
Approval for
effectiveness
of the
registration
statement is
granted
ICO
Filing
application
documents
with the
SEC for
preliminary
review
Filing the
completed
application
documents
and meeting
with the SEC
for
clarification
The SEC
issues a
notification
letter for
commencing
the approval
process
Approval
or
rejection
is
granted
60 days 20 days 10 days 3 days

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Report and Filing after ICO Launching
 DT Issuer must submit with the SEC:-
- report on the result of the DT sales within 15 days from the sale closing date
- report on the business operations and the current financial status
- report on other significant events that may affect investment decisions within 3
days from the date on which the issuer knows or should have known of such
event, e.g. entering into insolvency proceeding, serious damages to the issuer,
cease of business operation, change of business objectives, failure to comply
with the payment schedule, changes in the price or value of DT.
 ICO portal must submit with the SEC a summary report on investment
transactions made through ICO portal.

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 Regulated by the Revenue Code Amendment (No. 19) Emergency Decree B.E.
2561 (A.D. 2018)
 Assessable income under the Revenue Code that are subject to 15% withholding
tax include:-
(1) Margin from transferring of digital assets in an amount that exceeds the
investment capital amount
(2) Dividends or other benefits derived from holding of digital assets.
Withholding Tax

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ICO Portal – Services and Restrictions
 A provider of electronic system services for ICO of new digital tokens by checking and
verifying:-
- characteristics of digital tokens to be offered to the public
- qualifications of the ICO issuer
- completion and correctness of the registration statements
- draft prospectus/whitepaper and other information disclosed to the public by the ICO
issuer through the ICO portal.
 Must obtain an ICO Portal License from the SEC.
 Cannot operate any other new business after the ICO Portal License is granted unless it
has obtained permission from the SEC before operating such other business subject to
proof of no conflict of interest.
 Cannot agree with investors to exclude or limit liabilities of ICO portal for damages caused
from failure to comply with the SEC regulations.
 Must have a system for segregating assets of investors.

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ICO Portal – Required Qualifications for Applicant
 Being a private or public company registered in Thailand
 Registered capital not less than THB5 million fully paid up
 Not having a financial status which may cause damage
 Not being under any other circumstances for the SEC to reasonably believe that
the applicant is under a financial problem or is not suitable for or is not capable to
control and operate its business
 Directors, managers or other authorized persons not having any of 19 prohibited
characteristics prescribed by the SEC
 Having appropriate and sufficient management structure, operation system and
HR system
 Having sufficient personnel with appropriate knowledge, capability and expertise
and without dishonest or negative track records
 Having a computer system fully prepared for verifying digital tokens, risk
management, data security and other computer systems required by the SEC.

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 Crypto exchange, crypto broker and crypto dealer must obtain a license from the MOF with
recommendation of the SEC.
 Minimum capital requirements (THB million)
 The lower capitals apply if licensees (1) do not keep in custody the assets of customers or (2)
keep them in custody but cannot access to or transfer them without obtaining prior approval
from customers on a case-by-case basis.
Digital Asset Licenses
Type of License
Paid-up Registered Capital Capital Fund Maintenance
Normal Lower Normal Lower
Exchange 50 10 25 5
Brokerage 25 5 12.50 2.5
Dealer 5 - 2.50 -

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Digital Asset Licenses – Qualifications
 being a private or public company registered in Thailand
 having a fully paid-up registered capital of not less than
the minimum requirements
 having appropriate management structure, operation
system and staff
 not having financial problems or other reasonable
grounds for the SEC to reasonably believe that the
applicant has deficiency or will not be able to control and
operate its business
 major shareholders, directors, managers or other
authorized persons not having prohibited characteristics

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