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Blockchain technology has been around for over 10 years now, and in all these years, it has catered exclusively to the crypto verse and a number of blockchain-based innovative ideas. However, it seems the technology has room for other markets including the traditional bond and stock market.
This was made known in a local report in Thailand which stated that the National Legislative Assembly (NLA) has given the green light for an amendment of the state’s Securities and Exchange Act. The Thai SEC amended the rules and regulations in the Act to pave way for scripless securities to be issued and tokenized through blockchain. As a result, we are expected to see bonds and stocks trading on blockchain in the near future.
While this is indeed a huge change in the capital market, the Commission assured the public to expect a few changes. The classification of securities is proposed to continue with little or no changes. The first remarkable change is the fact that the sales of subscription for initial oublic offerings (IPOs), security token offerings (STOs), and initial coin offerings (ICOs) will now be based on scripless issuance. Due to the recent adjustment, the Commission will now issue depository licenses to businesses operating depository of securities and digital tokens.
Also, the Commission has put in place a certain level of clarity to guide businesses which trade securities. According to the director of corporate communication department of Thailand’s SEC, Pariya Techamuanvivit, the features of rights and obligations associated with a token determines if such token is regulated under the digital assets royal decree or the Securities and Exchange Act. In that vein, any financial instrument regarded as securities under the act (e.g stocks, mutual funds, and bonds) would be regulated under the act even though it is in the form of a digital token.
To put this into perspective, any token that allows its holders right to participate in profit sharing, voting, and dividends is considered securities whether it is in the form of a digital asset or the traditional stocks and bonds. In addition, any token whose issuer is obligated to pay its holders interest and repay principal would be considered a debt instrument under the Act irrespective of the form it takes – whether a digital assets or the conventional financial instruments.
Elaborating on the reason for the change, Tipsuda Thavaramara, Deputy Secretary-General of Thailand’s SEC, explained that the Commission embarked on this journey to increase the efficiency of the capital market. This amendment was pertinent to serve the tokenization platform in the future, thus further strengthening the digital asset ecosystem.
Thailand has already become the first country in the world to enable blockchain for tax probes. With this legislation, it certainly appears that the country attempts to put itself in the forefront of the crypto world.