Thailand SEC Moves to Tighten Funding Rules for Crypto Firms

TL;DR:

• Thailand proposes extending regulatory approval requirements to those who finance majority shareholders of crypto companies.
• The Thai SEC seeks to curb money laundering by requiring indirect financial backing to be treated as formal shareholding.
• The public consultation on the proposed measures will remain open until April 22, in line with similar regulatory trends across Asia.

The Securities and Exchange Commission of Thailand submitted on Monday a proposal to expand regulatory approval requirements in the crypto market. Under the new framework, anyone who finances or economically backs a majority shareholder of a crypto company would be treated, for regulatory purposes, as a shareholder requiring authorization from the regulator.

The measure aims to close gaps that allow capital of dubious origin to enter the sector. According to the SEC, hidden capital flows represent a legal, credibility, and reputational problem for companies in the ecosystem. The regulator emphasized that the goal is to ensure that business operators are funded exclusively from legitimate sources, with no ties to illicit activities.

The Scope of the New Rules in Thailand

The proposed text covers a broad spectrum of financial contributors. It does not only apply to those who provide funds directly to shareholders, but also to those who do so indirectly through the acquisition of equity stakes. The rules apply both to acquisitions in the operators themselves and in legal entities that are shareholders of those operators.

“The provision of significant financing will include guarantors, contractual arrangements or investments in any instrument that results in the financier having the status of, or acting in substance as, a provider of funds for such majority shareholders,” the SEC stated in its communiqué. An exception is established for state-linked entities, such as ministries, departments, or public agencies, given that they are already subject to government oversight.

A Trend Across Asia’s Crypto Market

The proposal is aligned with regulatory trends across Asia. South Korea, for instance, is studying the possibility of capping equity participation in cryptocurrency exchanges at 20%. In Thailand, authorities had already launched a campaign against “grey money” in January to strengthen oversight over physical and digital markets. As a result of joint actions between the regulator and the Thai Digital Asset Operators Association, local platforms froze around 10,000 accounts as part of an anti-money laundering operation.

The proposed measures are open for public consultation until April 22.