Thailand SEC Proposes Rules for Exchanges to Issue Utility Tokens

The Thailand Securities and Exchange Commission (SEC) has initiated a consultation period to gather feedback on proposed rules that would permit exchanges or their affiliated entities to issue utility tokens. This move is part of Thailand's broader efforts to establish a comprehensive regulatory framework for the crypto industry. The consultation period, which began this week, allows stakeholders to provide input on the updated listing criteria for licensed crypto exchanges. The feedback window remains open until July 21.

The proposed amendments, approved during a board meeting earlier this month, aim to allow exchanges to list utility tokens or cryptocurrencies issued by themselves or their affiliated entities, provided they serve a functional purpose within blockchain networks. This change is expected to foster innovation within the industry while ensuring stricter investor protections. The new framework also mandates greater disclosure from exchanges, requiring operators to reveal the identities of individuals connected to the issuers of listed digital tokens. This information will be flagged using alert symbols within the SEC’s electronic reporting system, designed to enhance oversight and reduce risks of insider trading.

Existing tokens that are already trading will not be exempt from these new rules. Exchanges must ensure that token issuers disclose all related parties within 90 days of the announcement’s effective date. This regulatory overhaul aligns with Thailand’s broader vision to establish itself as a global digital asset hub, balancing innovation with investor protection. It follows closely on the heels of several major policy shifts, including the government’s decision to waive capital gains tax on crypto profits earned via licensed platforms. The tax exemption took effect on January 1 and will run through December 31, 2029.

The SEC’s call for feedback also arrives amid heightened enforcement activity. Beginning June 28, the commission—working under the Ministry of Digital Economy and Society—will block access to five unauthorized crypto exchanges: Bybit, 1000X, CoinEx, OKX, and XT.COM. The platforms have been accused of offering trading services to Thai residents without obtaining the necessary licenses. This move underscores the SEC’s commitment to ensuring that all crypto activities within the region are conducted in compliance with regulatory standards, thereby protecting investors and maintaining market integrity.

Thailand has a history of dealing with crypto-related issues, including a significant insider trading scandal in 2022. In August of that year, the SEC alleged that the chief technology officer of Bitkub, one of the largest exchanges in the country, used insider information to purchase certain tokens ahead of a major deal. This incident highlights the need for stricter regulations and oversight in the crypto industry to prevent such malpractices.

Insider trading, the act of buying or selling a security based on private, nonpublic information, is considered illegal in many jurisdictions. The exact rules depend on the regulating body, such as a country’s corresponding Securities and Exchange Commission. There have been several instances of alleged insider trading in the crypto market industry. In 2021, an employee of OpenSea was accused of using insider knowledge to buy NFTs that were soon to be featured on the OpenSea homepage. In 2022, three employees of Coinbase were charged with insider trading, with two of them being sentenced to prison. More recently, Binance suspended a staffer in March after an investigation into alleged insider trading. These incidents underscore the importance of regulatory measures to prevent insider trading and ensure a fair and transparent market.