Law related to cryptocurrency in ThailandIn 2561 B.E., Thailand established "Royal Decree on Digital Asset Business B.E. 2561" which define rules for managing digital asset businesses, focusing on privately issued digital currencies. Cryptocurrencies are recognized as digital assets, and specific types of assets and associated activities are regulated. Importantly, these regulations do not classify digital assets as legal tender, signaling that Thailand does not directly support them as a form of currency. Instead, digital assets are viewed as investment assets, and investors should be mindful of the associated risks.
Supervising activities related to digital assets(1) Crowdfunding through the offering of digital tokens to the public , excluding the offering of cryptocurrencies unless declared as digital tokens.
(2) Acting as an intermediary for the buying and selling or exchanging of digital assets
Types of digital Asset licensing1.Digital Asset Exchange:It is a central hub or network established for the buying or exchanging of digital assets through matching, contractual agreements, or system organization for the convenience of individuals looking to trade or exchange digital assets. Participants can make agreements or match with each other in a manner similar to regular trade.
Examples of well-known Digital Asset Exchanges globally and in Thailand include platforms like Coinbase, FTX, or ERX. These platforms serve as intermediaries connecting members for buying or selling digital assets and charge transaction fees, similar to general consumer product trading markets.
2.Digital Asset Broker:A Digital Asset Broker is a service provider characterized as an agent or intermediary facilitating the buying or exchanging of digital assets for others. This is done through regular trade practices, and the broker receives fees or compensation. The broker may send orders to Digital Asset Exchanges or Digital Asset Dealers. It differs from Digital Asset Exchanges as it does not involve the direct trading or exchanging of digital assets within the platform. Instead, the broker sends orders to buy or exchange digital assets or cash of members to create transactions with other traders or individuals. Due to the global and highly liquid nature of digital assets, brokers can connect with traders or individuals worldwide.
A Digital Asset Broker serves as a go-between for handling buy or sell orders and exchanging digital assets based on members' instructions. Unlike a Digital Asset Exchange, a broker has more flexibility as they are not restricted to trading within a single platform. They can choose and direct orders to different exchanges. However, the selection of exchanges for member services must adhere to the criteria set by the SEC office.
3.A Digital Asset DealerA dealer
is a service provider or entity that actively engages in buying, selling, or exchanging digital assets as a regular business activity. This occurs outside the realm of a specific Digital Asset Exchange.
In simpler terms, a Digital Asset Dealer sets buying and selling prices through negotiations. When a buyer wants to purchase digital assets, the dealer offers a selling price. If both parties agree on the price, they can proceed with the exchange. The flexibility of a Digital Asset Dealer lies in the ability to offer more competitive prices and handle transactions without the need for market matching, essentially facilitating trades outside the traditional trading platform.
Criteria for getting licensesTo obtain approval for a digital asset license in Thailand from the SEC, businesses need to meet the following requirements:
- Establish a company in Thailand.
- Ensure that directors, executive directors, and individuals in positions of authority, including major shareholders, do not have disqualifying characteristics as per SEC guidelines.
- Present a strong business plan that includes a ready-to-operate digital asset system.
- Provide audited financial statements that adhere to Thai Financial Reporting Standards, conducted by an auditor approved by the SEC.
- Foreigners can be shareholders, but they must hold a minority or equal share. It is prohibited to have a shareholding greater than that of Thai nationals to be eligible for a license application.
Additionally, if the applicant functions as a digital asset exchange, they should not engage in digital asset dealer activities, and vice versa.
Paid-Up Capital RequirementsCompanies seeking a license must meet the following paid-up registered capital criteria:
Digital Exchange:- Regular Digital Exchange: Minimum THB 50 million.
- Non-Asset-Keeping Exchange: Minimum THB 10 million.
- Asset-Keeping Exchange (without access to or transfer of customer assets without approval): Minimum THB 10 million.
Digital Asset Broker:- Regular Digital Asset Broker: Minimum THB 25 million.
- Non-Asset-Keeping Broker: Minimum THB 1 million.
- Asset-Keeping Broker (without access to or transfer of customer assets without approval): Minimum THB 5 million.
Digital Asset Dealer:Digital Asset Fund Manager:- Asset-Keeping Managers or those serving non-institutional customers: Minimum THB 25 million.
- Non-Asset-Keeping Managers serving only institutional customers: Minimum THB 10 million.
Digital Asset Advisor:Additionally, exchanges, brokers, dealers, fund managers, and advisors must maintain net capital as per relevant regulations.
License FeesApplicants must pay prescribed fees to obtain a license, including an initial fee of THB 30,000, irrespective of the service type. Additional licensing fees vary based on the service type:
Digital Asset Exchange:- License fee: THB 2.5 million.
- Annual fee: 0.002% of total trading value (usually THB 0.5-20 million).
Digital Asset Broker:- License fee: THB 1.25 million.
- Annual fee: 0.001% of total trading value (usually THB 0.25-10 million).
Digital Asset Dealer:- License fee: THB 1 million.
- Annual fee: 1% of profit (capital gain) from trading (usually THB 0.1-5 million).
Digital Asset Fund Manager:- License fee: THB 0.5 million.
- Annual fee: 0.001% of total assets under management (usually THB 0.5-10 million).
Digital Asset Advisor:- License fee: THB 15,000.
- Annual fee: THB 25,000.
Application Process and ApprovalThe application period is 150 days from submission to the SEC. After review, the SEC forwards the application to the MOF within 90 days, with the MOF considering it for an additional 60 days. Approval from both entities is required. The business must commence operations within 180 days post-approval.
How to calculate taxes for cryptocurrency?Taxation on cryptocurrencies involves two main scenarios:
- Income from Profit Sharing: If you invest in cryptocurrencies such as Staking or DeFi and receive returns in the form of various digital coins, cryptocurrency taxes will be calculated based on the value of the digital coins you receive as a profit share.
- Income from Coin Sales: If you sell any digital coins and make a profit from the sale, the amount earned from the buy-sell transaction will be used to calculate taxes.
It's obliged to pay 15% of Withholding tax and to declare personal or corporate income tax, based on abovementioned income.Example of calculating cryptocurrency tax for individuals:Let's say you engaged in cryptocurrency trading and made a profit of 10,000 baht. You need to withhold tax at the source, which is 15%. Therefore, the tax to be deducted is 10,000 x 15% = 1,500 baht. In summary, after deducting the tax, your net profit from this cryptocurrency transaction would be 10,000 - 1,500 = 8,500 baht.
It's important to note that this withholding tax of 15% is not considered final tax. In the next tax filing period, you are required to report your share of profits or gains from cryptocurrency trading. Failure to do so may result in penalties for tax evasion or incomplete tax reporting.
Is Cryptocurrency subject to value-added tax?Considering the tax regulations, the Revenue Department has interpreted that cryptocurrency transactions may fall under the category of "services." Therefore, if the sale of cryptocurrencies exceeds 1.8 million baht per year, it is subject to value-added tax. However, this is still under consideration and is currently exempted in cases where the sale of cryptocurrencies occurs through exchanges regulated by the SEC (Securities and Exchange Commission) only (pending additional legislation).
