On March 25, 2024, Thailand’s Securities and Exchange Commission (SEC) published an amendment to its Notification re: Public Digital Token Offering to strengthen governance for initial coin offerings (ICOs). The amendments took effect on April 16, 2024, and reflect the SEC’s commitment to creating a safer and more transparent ICO environment, enhancing investor protection, and building confidence in ICOs as a fundraising tool.

The key changes are outlined below:

New Checks and Balances Requirements

The new regulations require digital token issuers to implement checks and balances to protect investor rights—including an annual audit requirement and measures to prevent and manage conflicts of interest. These measures must be clearly disclosed in the ICO filing documents. In addition, certain project-related decisions must be approved by the issuer’s board of directors, which is also responsible for the accountability of such decisions.

Improved Rules Concerning Voting Rights

The SEC has introduced rules concerning voting rights and procedures for digital token holders, particularly for token types that previously lacked regulatory clarity. These rules specify the procedures for soliciting votes, the rationale behind vote requests, and the criteria for determining voting outcomes. The new rules, however, do not apply to real estate-backed tokens or infrastructure-backed tokens.

Enhanced Advertising Regulations

The SEC has revised advertising guidelines to ensure that investors receive essential information. The updated rules now require all ICO advertising to be fair and informative and to avoid misleading content. Advertisements must include appropriate risk warnings and a credible source for any claims made.

The notification also stresses that it is the responsibility of digital token issuers to strictly supervise and ensure that those who create advertisements with or for an issuer comply with all relevant advertising regulations, including the following:

• Warning of investment risk: Advertisements must include warnings about investment risks and contact information for further inquiries.
• Reference to third-party information: If an advertisement uses third-party information, the source must be reliable, up-to-date, and clearly provided.
• Statements on Guaranteed Returns: Advertisements must not guarantee returns from digital token investments, as this could lead to misunderstandings or discrepancies with the information submitted to the SEC in filing statements and prospectuses. If expected returns are advertised, the calculations must be backed by adequate supporting and risk information for each calculation model.
• Promotional campaign: Advertisements for promotional campaigns must focus primarily on offering digital token information, with marketing content being secondary.
• Advertisement expenses: Costs associated with advertising that can be deducted from token holders’ returns must be directly related to the ICO or the ICO-funded project.

For more information on this notification, or on any aspect of digital assets and cryptocurrency in Thailand, please contact Pornpan Wichawut at [email protected], Napassorn Lertussavavivat at [email protected], or Rujaporn Paritsantik at [email protected].