The government of Thailand will impose rules on cryptocurrencies and initial coin offerings (ICO) starting next month.
Thailand Finance Minister Apisak Tantivorawong revealed that the new Royal Decree on regulating the transactions of digital assets was approve by the cabinet on March 27. The decree will grant ICO issuers 90 days to inform the Securities and Exchange Commission (SEC) of their plans before the law takes effect. The decree extended the period to 90 days after market participants complained that 60 days was not a reasonable amount of time.
“The new law to comprehensively regulate cryptocurrencies and digital tokens is necessary to prevent money laundering, tax avoidance and crime,” said Tantivorawong. “The new law is not meant to prohibit cryptocurrencies, initial coin offerings (ICOs) and other digital asset-related translations, but to protect investors.”
The decree also contains a 7 percent value-added tax (VAT) on top of a 15 percent withholding tax on any crypto related capital gains. The VAT will still apply even if crypto trades produce no gains. Retail investors will be exempt from paying the VAT if they trade digital assets through exchanges.
Finance Permanent Secretary Somchai Sujjapongse said the laws regulating cryptocurrencies are a step in the right direction, adding that several countries have greater awareness of the problems associated with them.
Commenting on the new law, Korn Chatikavanij, chairman of the Thai FinTech Association, said the move would hinder the growth of domestic startups as they will register their businesses overseas to avoid the levy. He believes that “it is not a problem for ICO issuers” to take their offerings to Singapore even though the cost could be higher than in Thailand.
“Singapore is a good location to raise funds from ICOs as it waives the capital gains tax, so the market environment supports the registration of ICOs with good prospects there,” said Korn. “Who are the beneficiaries from Thailand’s current rules and regulations on crypto-assets? I don’t see [anyone benefiting] from the current situation.”
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