Update on Public Hearing Regarding Thailand's New Regulation Framework for Utility Digital Tokens

On 25 January 2023, the Securities and Exchange Commission of Thailand ("SEC") issued a public hearing document No. AorNorDor. 4/2566 ("Public Hearing") focusing on the regulatory scope of ready-to-use utility tokens. These have not been heavily regulated compared to other types of digital tokens, namely, not-ready-to-use utility tokens and investment tokens – both of which requires SEC's approval in order to be issued and offered to the public. The hearing period ended on 24 February 2023.

According to the Public Hearing, SEC proposed that ready-to-use utility tokens be divided into two groups as follows:

1. Group 1 Ready-To-Use Utility Tokens ("Group 1 Tokens")
   
   This includes:
   
   
   • ready-to-use utility tokens issued for consumption purposes, such as digital vouchers, loyalty points, tokens which can be redeemed for movie tickets; and 
   • ready-to-use utility tokens issued as a digital certificate or representation of rights, such as carbon credits, renewable energy certificates, transcripts, medical certificates, tax certificates, title deeds, medical certificates.
   
   Group 1 Tokens must be non-financial products and have a specific channel to be traded (such as a marketplace). SEC's proposal includes, among others, that Group 1 Tokens will be exempted from public offering requirements, and any provision of service relating to Group 1 Tokens shall not be considered as conducting a digital asset business.
   
   Digital asset exchanges will not be allowed to list Group 1 Tokens for trading in their platform. However, this will not apply to Group 1 Tokens which are already listed in digital asset exchanges.


2. Group 2 Ready-To-Use Utility Tokens ("Group 2 Tokens")
   
   This includes ready-to-use utility tokens which do not fall into Group 1 Tokens category, such as:
   
   
   • ready-to-use utility tokens which have a characteristic similar to that of financial products, such as governance tokens of Decentralized Finance (DeFi), Centralized Finance (CeFi), or Gaming Finance (GameFi) projects and exchange tokens; and 
   • ready-to-use utility tokens which specify the right of the holder to acquire the products or services provided through a distributed-ledger technology (DLT). As opposed to Group 1 Tokens, Group 2 Tokens can be listed on digital asset exchanges. However, in doing so, they will be subject to the public offering requirements similar to investment tokens and not-ready-to-use utility tokens.

As opposed to Group 1 Tokens, Group 2 Tokens can be listed on digital asset exchanges. However, in doing so, they will be subject to the public offering requirements similar to investment tokens and not-ready-to-use utility tokens.