Bangkok: The SEC has announced revised capital regulations for digital asset business operators to enhance credibility in the digital asset market and bolster investor protection, with changes set to take effect on November 1, 2024. The revisions also align capital maintenance regulations for securities and futures business operators engaged in digital asset activities to be consistent with those for digital asset business operators.

According to Thai News Agency, the SEC conducted public hearings to gather input on the draft amendment of capital criteria, taking into account feedback from various stakeholders. The revised criteria aim to increase credibility in the digital asset market, protect investor assets, and ensure business operators are well-capitalized to support ongoing operations. Key changes include adjustments to the paid-up capital for digital asset business operators like exchanges, brokers, and dealers, as well as modifications to capital maintenance criteria, including setting a fixed minim
um maintenance value of 25 million baht for businesses holding customer assets and 5 million baht for those that do not.

The revised regulations also introduce a new framework for capital maintenance to support risks associated with digital asset trading services and customer asset storage. For instance, the net capital (NC) rate for digital assets held in hot wallets will vary based on customer storage proportions, with incentives to store digital assets with local custodians in Thailand by setting a lower NC rate compared to foreign custodians.

Furthermore, the SEC has improved criteria for the maintenance of customer digital assets, stipulating that no more than 50 percent of digital assets maintained by operators with less than 1,000 million baht in customer assets should be held in hot wallets. It also addresses situations where businesses struggle to maintain required fund levels, aiming to safeguard customer interests and mitigate market risks.

The SEC has also introduced changes to related report f
orms and criteria, such as using insurance policies or digital assets of the same type as customers’ for maintenance of alternative funds. Additional revisions include enhancing early warning levels for business operators and improving the documentation and submission process for fund reports.

The capital maintenance criteria for securities and futures business operators involved in digital asset activities have been aligned with those for digital asset operators to ensure uniformity. This includes adjusting minimum capital requirements based on customer asset storage proportions and trading service risks, as well as refining early warning levels and suspension protocols for digital asset businesses.

The updated regulations have been published in the Government Gazette and will become effective starting November 1, 2024.