Thailand put a new law in place yesterday to control and regulate cryptocurrency transactions and initial coin offerings.
It comes with hefty fines and jail terms to crack down on fraud and unauthorised transactions.
The country enacted a royal decree stipulating that cryptocurrencies and digital tokens are digital assets. Thailand's Securities and Exchange Commission will be in charge of overseeing and regulating all cryptocurrency transactions and verifying the identity of clients.
The law was proposed by the Finance Ministry in February following the Bank of Thailand's ban on cryptocurrency transactions among financial institutions to prevent possible cases of fraud and misconduct.
Finance Minister Apisak Tantivorawong said in March that the law was necessary to comprehensively regulate cryptocurrencies and digital tokens to prevent money laundering, tax avoidance and crime.
The royal decree stipulates that unregistered token brokers or those who perform token transactions through unregistered brokers will face a jail term of up to two years and fines of at least two times the token values, up to a maximum of 500,000 baht (S$20,930).
Fraudulent filings could invite a five-year jail sentence. Those who carry out unauthorised business in digital assets face jail terms of between two and five years. They could also face fines of up to 10,000 baht for each day that the business was conducted.
Those who allow others to use their accounts to carry out transactions can be jailed for up to one year and fined up to 100,000 baht.
Meanwhile, a separate decree has set a 15 per cent capital gains tax on each digital transaction. The Thai Blockchain Association had protested against this move earlier, saying it would discourage investors.
Economist Anusorn Tamajai told The Straits Times that the new law will likely increase investor confidence in the regulated market.
Mr Thanyalak Vacharachaisurapol, assistant managing director of Kasikorn Research Centre, said the new law can assure the quality of digital offerings, and will "provide long-term stability to the market, which in turn means a positive ecosystem for domestic start-ups to increase their potential and competitiveness".
In mid-February, J Ventures, a subsidiary of listed company Jaymart Plc, became the first company in Thailand to raise capital by selling digital tokens on the Thai Digital Asset Exchange. It managed to raise 660 million baht through 100 million JFin coins in under 48 hours.