S2: FinTech Markets and Laws in Thailand (20 Oct 2021)

Kullarat Phongsathaporn | 20 October 2021
FinTech markets and laws in Thailand

1
FinTech Landscape in
Thailand

The FinTechLandscape:DevelopmentsandTrends
Open Banking
&
Collaboration
Blockchain Initiatives
Digital
Assets
Regulatory
Sandbox
Deposit & Financing
 Digital banking
 Virtual / neo-banking
 Digital lending
 Alternative credit data P2P
Lending
 BNPL
Alternative Fundraising
 Digital token offering – ICO,
STO, IEO
 Equity Crowdfunding
 Debt Crowdfunding
 VC Investments
Alternative Investments
 Digital asset investments
 Equity & Debt Crowdfunding
 P2P lending
 Robo advisor
Capital Markets
 Digitalization of capital markets
 STO / Asset Tokenization
 Scripless securities
 Digital asset businesses
Payments& Remittance
 E-Payment
 Online money remittance
 Blockchain-based
 Cross-border initiatives
 Digital asset –
cryptocurrencies, stable coin
 BNPL
National
Digital ID
& e-KYC
The
FinTech
Landscape

4
© 2020 Baker & McKenzie Ltd.
General • Intellectual Property (IP)
• Tax
• Foreign business law
• Consumer protection law
Fin (Financial-related laws)
• licensing and regulatory
o Financial Institution Businesses Act,
Securities Act, Derivatives Act,
Exchange Control Act, Payment
System Act, Insurance law, Digital
asset law, etc.
o non-bank financial businesses
• AML/CFT laws
• exchange control law
• credit business law
FinTech Legal Framework
(Tech-related laws)
• Electronic Transaction Development Act B.E. 2562 (2019)
• Electronic Transactions Act B.E. 2544 (2001)
o ETDA Recommendation on ICT Standard for Electronic Transactions
Re: Electronic Signature GuidelinesNo. KhorMorThorOr. 23-2563
• Digital Development for Economic and Social Development Act B.E. 2560 (2017)
• Digital Council of Thailand Act B.E. 2562 (2019)
• Digitalization of Public Administration and Services Delivery Act B.E. 2562 (2019)
• Computer Crime Act B.E. 2550 (2007)
• Cybersecurity Act B.E. 2562 (2019)
• Personal Data Protection Act B.E. 2562 (2019)
Tech

2
Regulatory framework for
specific FinTech products

2.1
Regulated payment
services

Payment Services Licenses under PSA
7
Type of service Sub-type
of service
Type of license Minimum paid-up registered capital
1. Provision of credit, debit, or
ATM card services
N/A License to issue a payment card plus
+ license to operate creditcard business– for credit or
+ banking license – for debit or ATM
As required for credit card businesses
As required for commercial banks
2. Provision of an electronic
money service (e-money
services)
"Electronic money" means electronic
cards issued by a service provider for
service users, with the prepayment of
funds to the service provider, for the
funds to be used to make payments for
goods, services, or any other things in
lieu of cash.
N/A E-money license THB 100 million*
3. Provision of a service of
transferring funds by an
electronic means (e-fund transfer
services)
"Electronic fund transfer" means the
provision of services whereby a business
operator receives funds froma user for
transfer to a recipient.
N/A Electronic fund transfer license THB 10 million*
*If anyone intends to operate more than one type of regulated payment service business, each of which requires different levels of paid-up registered capital, onlythe highest level would apply.

Licensing schemes under Payment Systems Act B.E.
2560 (2017)
8
Type of
service
Sub-type of service Type of license Minimum paid-up registered capital
4. Receiving
electronic
payments for and
on behalf of
sellers, service
providers, or
creditors (referred
to as e-payment
services)
4.1 Acquiring service (card-based)
Providing payment services for payment by
electronic cards, by transferring the electronic
payment data from the electronic cards to the
payment card network operators, in order to send
this data to the card issuers, and with the
obligation to pay the sellers of goods, service
providers, or payment facilitating service
providers.
Acquiring license THB 50 million*
4.2 Payment facilitating service(card-
based)
Providing payment services for payment by
electronic cards, by transferring the electronic
payment data from the electronic cards to the
acquiring serviceproviders or another payment
facilitating service provider, and withthe
obligation to pay the sellers of goods, service
providers, or another payment facilitator.
Payment facilitatinglicense THB 10 million*
4.3 Service of receiving payment for
and on behalf of others (non-card)
Providing the e-payment service of receiving
payment for and on behalf of the sellers of
goods, providers of services, or creditors.
License for the service of receiving paymentsfor
and on behalf of others
THB 10 million*
*If anyone intends to operate more than one type of regulated payment service business, each of which requires different levels of paid-up registered capital, onlythe highest level would apply.

10
Characteristics Personal loan
Personal loan for consumption
or non-specific purposes
Personal loan for occupational
purposes
Digital personal loan Vehicle registration loan
Purpose of the loan For personal consumptionor non-
specific purposes
For occupational or business
purposes.
For personal consumptionor non-
specific purposes.
For personal consumptionor non-
specific purposes.
Credit line For customers with average
monthly incomeor cash inflow in
the deposit accountsof less than
THB 30,000 per month, the credit
line would be up to 1.5 timesthe
average monthly income or cash
inflow.
* The credit line cannot be
approved if the customer already
has personal loan credit linesfrom
three other business operatorsor
commercial banks.
Business operatorsare able to
grant credit linesto the customers
based on each customer's ability to
repay debt. However, the business
operatorsmust have policiesand
proceduresin place for the
granting, monitoring, andreview of
personal loansto ensure that the
loansare being used for
occupational or businesspurposes.
< THB 20,000 and a term loanof
not more than 6 months.
Assess the customer's ability to pay
the debt and consider expected
cash flow and liquidity asa result of
selling the vehiclefor which the
registration isused as collateral.
Interest rates and
fees collectible
i. Interest, fines, service charges, and any other feesof up to 25 percent per annum (effective rate).
ii. Expenses that are actually paid, ina reasonable amount asspecified by the Bankof Thailand
iii. For other reasonable expensesactually paid by the customer in additionto expensesunder (ii) above, the
personal loan businessoperator must receive prior approval from the BOT.
i. Interest, fines, service
charges, and any other fees
of up to 24 percent per
annum (effective rate)
ii. Expenses that are actually
paid and in a reasonable
amount asspecified by the
BOT.
Special
characteristics
A traditional creditassessment
process must be used but
alternativemethods(e.g.
information-based lending) can be
used in addition.
Either traditional or alternative
methods(e.g. information-based
lending) can be used.
Digital lending businessoperators
must adopt digital technology in
the following processes: credit
assessment and loan approval;
loan disbursement and loan
repayment; and customer service.
Vehicle registrationmust be
provided ascollateral.
Personal loan

11
Characteristics Nano-finance
Purpose of the loan For occupational purposes
Credit line ≤ THB 100,000 per customer
Interest rates and fees
collectible
Interest, fines, service charges, and any other fees of up to 33 percent per annum in total
(effective rate)
Special characteristics Flexible credit assessment process / alternative methods (e.g. information-based lending)
Nano finance

Regulated
underlying
Non–regulated
underlying
Traditional
securities
offering
Digital Infrastructure
Existing
securities
To be announced
by the SEC
Regulated Exempted Digital token Cryptocurrency
Regulated Exempted
Securities
• The Securitiesand Exchange Act
• The Emergency Decree on the
Specific Purpose Juristic Person
for Securitization
• The Trust forTransactions
in Capital Market Act
E-money / E-payment
The Payment Systems Act
Derivatives
The Derivatives Act
Digital assets
The Emergency Decree on
Digital Asset Businesses
Investment
token
Utility token
Not ready-to-use
Regulated
Ready-to-use
Exempted
Others to be
announced by
the SEC
Investment
token
Utility
token
Digital tokens and laws

14
1. Offering of digitaltokens
• Digital token
• Cryptocurrency
• Issuer
• Digital Token Offering Portal
2. Digital asset businesses
• Digital asset exchange
• Digital asset broker
• Digital asset dealer
• Digital asset fund manager
• Digital asset advisor
1. New types of income
• Share of the profit or any benefit derived from holding
or having possession of digital tokens
• Capital gains from the transfer of a cryptocurrencyor
digital token
2. W ithholdingtax obligations
Background knowledge of digital assets
EmergencyDecree on Digital Asset
Businesses, B.E. 2561 (2018)
EmergencyDecree on the Amendment of the
Revenue Code (No. 19), B.E. 2561 (2018)
ThailandRegulatoryRegimeonDigitalAssets

15
• “Digital asset” means cryptocurrency and digital token.
• “Cryptocurrency” means an electronic data unit created on an electronic system or network for the purpose
of being used as a medium of exchange for the acquisition of goods, services or any other rights, or
the exchange between digital assets, and shall include any other electronic data units as specified in the
notifications of the Securities and Exchange Commission (SEC).
• “Digital token” means an electronic data unit created on an electronic system or network for the purpose of:
o specifying the right of a person to participate in an investment in any project or business
(investment token);
o specifying the right of a person to acquire specific goods, specific services, or any other specific
right under an agreement between the issuer and the holder (utility token); and
o any other electronic data units of right as specified in the notification of the SEC.
Digital assets under Thai law
The Emergency Decree on Digital Asset Businesses, B.E. 2561 (2018) and Emergency Decree on the
Amendment of the Revenue Code (No. 19) were announced in the government gazette on 13 May
2018 and became effective on 14 May 2018.

Regulated VS Exempted Digital Tokens

Real estate digital token offering must
complywith key additional requirements
such as
- The construction of the underlying real
estate must be completed and ready to use
and the amount or value of the investment
in real estate must not be less than 80% of
the project’s amount or value or 500m THB
- There must be a full appraisal of title
documents carried out by at least 2
appraisers who have been approved by the
Office of the SEC.
- The issuer must set up a trust with the
details, qualifications, personnel, and
documents as required.
Qualifications for digital token issuer and digital tokens to be
offered
- Company established in Thailand
- Directors and executives does not have untrustworthy
characteristics
- Latest financial statement (if any) audited by an approved
auditor
- Type of digital token, business plan, objective, goal, guidelines
for implementing projects or activities according to business
plans, and the rights of the holders
- The source code of the smart contract of the digital token is
created and disclosed
- The draft prospectus and the registration statement for the
offering of digital token contains key information in accordance
with regulations
Qualifications for ICO portal
- Company established in Thailand
with registered capital of not less
than THB 5 million
- Directors, executive directors, and
people with management power
must not have any prohibited
characteristics
- With proper operation system and
sufficient responsible personnel to
operate the portal
- No affiliation to the digital token
issuer that could deprive its
independence
Key responsibilities
regarding the offering
project
- Consider information
regarding digital token,
registration statement
and prospectus,
source code,
qualifications of the
issuer, etc.
- Must perform KYC and
CDD for all investors,
and must categorize
and inform investors of
their rights and
limitations, and
provide a knowledge
test
Types of inv estors and offering limits
- Institutional and ultra-high-net worth investors => No limit
- Private equity and venture capital investors => No limit
- Retain investors=> THB 300,000 per person per round of
offering (the offering limit for retail investors in each round of
offering is the higher of ≤ four times the shareholders' equity of
the issuer, and ≤ 70% of the total offering amount per each
round)
Overview of the digital asset regulatory ecosystem in Thailand
(Updated on 18 October 2021)
*Cryptocurrencies that a digital token issuer or a digital asset business can receive as return or in a transaction, as of 18 October 2021, includesBitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Stellar (XLM).
Thai Baht / Cryptocurrency*
Digital token
Digital token
issuer
ICO
portal
Investor
General requirements for operating a digital
asset business
- Company established in Thailand with paid-
up registered capital as required for each
type of digital asset business
- Licensed by the MOF upon the
recommendations of the SEC
- Have a KYC and CDD procedure,
assessment for appropriateness and
customer’s ability to invest
- Have an appropriate work system and IT
system
Other requirements such as
- Asset keeping
- Net capital maintenance
- Introducing broker agent
- Change to significant work system
- Outsourcing
- Usage of cloud computing system
Custodyof customers’ assets
- Must keep no less than 90% of the
total customers’ assets in a cold wallet
- If the total value of the customers’
assets is below THB 15 million,
operators may keep the assets in their
own cold wallet
- If the total value is THB 15 million or
above, and the operators keeps the
assets for more than 5 consecutive
days, the assets must be kept in a
custodian service provider’s wallet
Inv estment token means an electronic
data unit created on an electronic system
or network for the purpose of specifying
the right of a person to participate in an
inv estment in any project or business.
Utility token means an electronic data
unit created on an electronic system or
network for the purpose of specifying
the right of a person to acquire specific
goods, specific serv ices or any other
specific right under an agreement
between the issuer and the holder.
Cryptocurrency means an electronic data
unit created on an electronic system or
network for the purpose of being used as a
medium of exchange for the acquisition of
goods, serv ices or any other rights, or the
exchange between digital assets.
Types of digital asset
Digital token
Crypto-
currency*
Thai Baht
Investor
Digital asset
business Digital asset
broker
Digital asset
dealer
Digital asset
fund
manager
Digital asset
advisor
Digital asset
exchange
Primary Market Secondary Market

3
Key legal and regulatory
issues necessary for
FinTech businesses

20

21

22

24
Source: https://www.digitalid.or.th/?p=9884
National Digital ID (NDID)
Registration and Authentication
Applicant User
IdP
Change status to
3
Issues identification of identity
2
User
Access service
1
IdP
Verification
2
RP
Result to user verification
3
Verification

Type 1
Generale-
signature
Type 2
Trustworthye-
signature
Type 3
Trustworthy
e-signature
with a certificate
issued by the
certificate service
provider
Is made in any form of letters,
characters, numbers, sounds,
or any other symbols created
in electronic form according to
Section 9 of the ETA
Is a type of e-signature in accordance with the
requirements under Section 26 of the ETA and is
accompanied by a certificate issued by the certificate
service provider to support such e-signature in
accordance with Section 28 of the ETA
General e-signature
Is a type of e-signature in
accordance with the requirements
under Section 26 of the ETA
Such as a Public Key Infrastructure
(PKI) digital signature
Trustworthy e-signature
Such as a PKI digital signature together with the
certificate issued by the certificate service provider
Types of e-signature
26

Risk mitigation and evidence of an e-signature
Unofficial translation from the Electronic Signature Guideline No. KhorMorThorOr. 23-2563, ETDA. Please refer to the Thai version.
Examples of
e-signature format
Examples of risk mitigation Examples of evidence
- Closing your email w ith
your full name
- Review e-mail security policy compliance
- Recording information on decision-making in the
appropriate document management system
- Information that is signed for
- Full name on e-mail closing
- Date and time the e-signature w as executed or
the date and time the e-mail w as sent
- Identity of the signer
- Verification method
- Scanning your w et ink
signature
- Using a stylus to sign
on a screen and
recording it
- Connecting the method used to show intent w ith
the key information relevant to the signer, format
of the signature, process of the signature, and the
date and time of the signature
- Connecting the method used to show intent w ith
information for the explicit e-signature
- Regular audits of the signing process to be in line
w ith usage
- Full name on e-mail closing
- Date and time the e-signature w as executed or
the date and time the e-mail w as sent
- Using an automated
system to verify users
combined w ith the format
of the Type 1 e-signature
- Auditing the w orksystem and functions regularly
- Recording necessary information automatically if
possible
- Having an appropriate process for verification and
authentication and control to information access
- Set up or control documents and content to not be
changed after the e-signature
- Record transaction to be sent to relevant
personnel for storage as evidence for transaction
- E-signature
- Log for the verification of the user
- Log for intent to sign (such as clicking a button or
ticking for acceptance)
Type 1
General
e-signature
© 2021 Baker & McKenzie Ltd. 27

Risk mitigation and evidence of an e-signature
Examples of
e-signature format
Examples of risk mitigation Examples of evidence
- E-signature that uses
PKI
- Management of key and information in the PKI
certificate regularly to ensure that the digital
signature is able to verify the signer and
detection of changes to messages and e-
signature
- E-signature
- Date and time the e-signature w as executed
- Certificate that is used in support of the digital
signature
- Information for verifying the validity, suspension,
or revocation of the certificate
- E-signature that uses
PKI and uses certificate
issued by the certificate
service provider
- Management of key and information in the PKI
certificate regularly to ensure that the digital
signature is able to verify the signer and
detection of changes to messages and e-
signature
- E-signature
- Date and time the e-signature w as executed
- Certificate that is used in support of the digital
signature
- Information for verifying the validity, suspension,
or revocation of the certificate
Type 2
Trustworthy
e-signature
Type 3
Trustworthy
e-signature
with a certificate
issued by the
certificate
service provider
28
Unofficial translation from the Electronic Signature Guideline No. KhorMorThorOr. 23-2563, ETDA. Please refer to the Thai version.

3.4
FinTech platforms and
collaboration projects

Digital Banking
 Payment
 Co-branded card
 Wallet
 POS lending
 Merchant lending
 Consumer financing
 Credit assessment
 Insurance
 Wealth management
 Retail Investment
Chat Application
Ride-hailing
Social Media
E-Marketplace
Financial
Services
Platforms Offering Financial Services
30

31
Platform as IT service provider / channel provider /
outsourcing service provider
Financial Service Provider Platform
 License holder (qualifications & ongoing
compliance)
 Risk management and internal control
 Liability towards customers for financial products
 May impose indemnification on platform
 Audit by regulator
 IT service provider / banking channel / banking
agent (qualifications & indirect ongoing compliance)
 Liability towards users for the use of platform (but
not as customers of financial products)
 Liability and indemnification towards financial service
provider (if required)
 Audit by regulator (through contractual obligation
towards financial service provider) (if required)

32
Collaboration Projects
Financial Service Provider
 License holder
(qualifications & ongoing compliance)
 Risk management and internal control
 Liability towards customers for financial products
 May impose indemnification on platform
Platform
 IT service provider / banking channel / banking agent
(qualifications & indirect ongoing compliance)
 Liability towards users for the use of platform
(but not as customers of financial products)
 Liability and indemnification towards financial service
provider
(through contractual obligation towards financial
service provider)
 Ownership of IP rights + licensing + infringement
 IT integration, IT security, SLA, Interoperability
 Ownership of data, data privacy + consent, cybersecurity
Additional

33
Platform as financial service provider
Considerations
 Licensing requirements
► Qualifications, shareholding / directorship restrictions
 Ongoing compliance requirements
► AML / CFT, treasury, mono-line requirement, risk management, IT security, Internal control, audit
 Cross-border compliance
► data privacy, cybersecurity
 Liability
 Use of some technologies for financial products require additional regulatory compliance
► AI, blockchain

bakermckenzie.com
Baker & McKenzie Ltd.isa member firm of Baker & McKenzieInternational,a global law firm withmember law firms
around the world. In accordance withthe commonterminology used in professional service organizations, reference to a
"partner" meansa person who is a partner, or equivalent, insuch a law firm. Similarly, reference to an "office"meansan
office of any such law firm. Thismay qualify as“Attorney Advertising” requiringnotice in some jurisdictions. Prior resul ts
do not guarantee a similar outcome.
Kullarat Phongsathaporn
Partner
Bangkok, Thailand
Tel: +66 90 980 6605
E-mail : kullarat.phongsathaporn@bakermckenzie.com
Facebook page: fintechlaw

S2: FinTech Markets and Laws in Thailand (20 Oct 2021)

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