Thailand SEC Moves to Tighten ICO Rules With Investor Testing Mandates

In brief

Thailand’s SEC proposes easing knowledge test rules for retail crypto investors, allowing them to skip repeat tests if already passed, replacing the current 3-month retesting requirement.
New rules would mandate suitability tests for all digital token investors, reviewed every two years, to ensure alignment between investor risk tolerance and product risk.
The proposed regulations aim to reduce burdens on investors and ICO portals while aligning with existing securities oversight standards.

Thailand’s securities regulator is seeking public input on new rules that would ease knowledge testing requirements for crypto investors while mandating comprehensive suitability assessments.

The Thai Securities and Exchange Commission announced on Friday that it is conducting public hearings on proposed initial coin offering regulations, which would allow investors to bypass repeated knowledge tests if they have previously passed such assessments.

Under current rules, investors must complete knowledge tests every three months before investing through ICO portals.

The proposed changes target two key areas of investor protection.

First, the SEC wants non-institutional investors, those not classified as ultra-high-net-worth or high-net-worth individuals, to pass a knowledge test before investing, unless they’ve already done so in the past.

Second, ICO portals would be required to conduct comprehensive suitability tests “to ensure that investors in digital tokens understand the investment risks and have a risk tolerance level appropriate and in alignment with the product risk.”

These assessments must be reviewed and updated at least every two years, replacing the current quarterly requirement.

“This proposal aims to reduce the burden on both ICO portals and investors by canceling the requirement for such assessment every three months,” the SEC said in its announcement.

The regulator noted that the new requirements align with “regulatory practices applicable to both securities and digital asset business operators.”

“Thailand has been a first mover for crypto regulations and the SEC has played a pivotal role in providing all regulated activities and licenses, much ahead of Singapore, Malaysia, Philippines, and Vietnam in South East Asia,” Jagdish Pandya, founder of Blockon Ventures and organizer of Thai Blockchain Week 2019, told Decrypt.

Pandya said the proposed knowledge and suitability tests would help keep “amateur investors” from blindly jumping into ICOs and repeating mistakes from the “old ICO scam era.”

“Their ICO portal enables raising funds, which is again a benchmark ahead of its time compared to UAE or Hong Kong too,” he noted.

Professional investor classes would remain exempt from the knowledge testing requirements under the proposed framework.

Investors and stakeholders have until August 1 to comment on the proposal, which could change how ICOs are accessed in Thailand.

Thailand’s regulatory push extends beyond ICO portals as in June, the SEC also opened consultations on allowing exchanges to list self-issued tokens with enhanced disclosure requirements to prevent insider trading.

The country is simultaneously preparing pilot programs for crypto tourism payments in popular destinations like Phuket and considering retail access to spot Bitcoin exchange-traded funds.