Legal update 2018
In light of the dramatic increase of peer-to-peer lending transactions, the Ministry of Finance has published a notification regarding peer-to-peer lending platform dated 10 September 2018 which became effective on 21 September 2018 to regulate and set out qualifications of P2P lending platform operator and certain key requirements as follows:
1. Platform provider shall be a private or public company incorporated in Thailand with a minimum paid up capital of Baht 5 million, whereby at least 75 per cent of its total issued shares with voting rights must be held by Thai persons;
2. Platform provider is restricted from acting as borrower or lender via a system or an electronic network whether or not on its own platform;
3. The applied business may be subject to a regulatory sandbox under supervision of the Bank of Thailand prior to its approval and the granting of licence; and
4. Maximum interest rate is limited at 15 per cent per annum.
Meanwhile, the Bank of Thailand is in the process of drafting relevant notifications to prescribe further detailed requirements which are expected to be put into force by the end of 2018.
On the rise of cryptocurrencies and initial coin offerings across the world, it is impossible to ignore the massive impact and embedded legal implications. Accordingly, the Emergency Decree on the Digital Asset Businesses B.E. 2561 (the “Decree”) was promulgated and came into effective on 14 May 2018 to regulate digital asset-related transactions, having the Office of the Securities and Exchange Commission (the “SEC”) as the supervisory authority to oversee the public offering of digital tokens and operation of digital asset businesses (e.g. digital asset exchange, broker and dealer).
Despite the varied approach adopted by each country to cope with the controversy of cryptocurrencies, the Decree does not prohibit these fast-growing transactions but rather sets out regulatory framework and protective measures for the stakeholders. Particularly, the Decree requires the issuer to seek approval from and file a registration statement and draft prospectus with the SEC and the public offering must be made through the approved ICO portal. Further, an operator of digital asset businesses is subject to certain prescribed qualifications and licencing requirements.
Likewise, the Emergency Decree on the Amendment of the Revenue Code (No. 19) B.E. 2561 was issued to specifically recognise (i) a share of profit or any benefit derived from holding or having possession of digital tokens, and (ii) capital gains from the transfer of cryptocurrencies or digital tokens, as taxable income and are subject to applicable taxes.
The Payment Systems Act B.E.2560 (2017) was promulgated on 18 October 2017 and became effective on 16 April 2018 with an aim at reforming and unifying Thailand’s regulatory framework for payment systems. Accordingly, the Bank of Thailand as main regulator under the Act is empowered to supervise three main categories of payment systems and payment services as follows:
1. essential payment systems (i.e. national payments infrastructure and payment systems for high value transfer, clearing, or settlement between members);
2. payment systems under supervision (i.e. payment systems or network for money transfer, clearing, or settlement or other systems which may affect public interest or confidence or the stability and security of payment systems); and
3. payment services under supervision (i.e. provision of credit card, debit card, or ATM card, e-money, bill payment and electronic money transfer services).
Whilst existing e-payment operators who have been granted licences under the current regime will be required to reapply for new licences or registrations (as the case may be) within 120 days after the announcement of the relevant notification of the Ministry of Finance (i.e. an application shall be submitted by 13 August 2018), any person who wishes to engage in regulated e-payment service must register or obtain a requisite licence (as the case may be) before commencing such businesses, unless other exemptions apply.