Amid the rapid adoption of crypto and the increasing need for regulation in the respective regions, Thailand’s financial regulators have announced on August 9 the launch of a “regulatory sandbox” designed to “test and refine” cryptocurrency services.

This launch of the regulatory sandbox comes against the backdrop of the country’s Securities and Exchange Commission’s (SEC) phased approach, which began earlier this year. The announcement noted:

Earlier in March, the SEC Board adopted a resolution approving in principle the creation of the Digital Asset Regulatory Sandbox. Later in May, the SEC held a public hearing on the matter to gather comments and suggestions from the public and stakeholders. Most respondents agreed with the principles and the proposed changes to the applicable regulations.

The regulator added that these steps will be followed by the issuance of “regulations specifying the characteristics of eligible services, the qualifications of participants and the scope of the Sandbox experiments.”

Digging deep into the Sandbox initiative

The crypto regulatory sandbox launched by the Thai SEC earlier today is seen not only as a response to global interest in digital assets and their “transformative” potential for the financial sector, but also serves as an “experimental” framework for companies to test their crypto-related services without the immediate pressure of full regulatory compliance.

In the announcement, the SEC highlighted that the sandbox is open for applications starting today, encouraging innovators in the digital asset sector to participate.

According to the SEC, in addition to being a testing ground, the regulatory sounding board would also promote “innovative capital market development within a framework of flexible regulation.”

The SEC further outlined specific rules for the sandbox. These include eligibility criteria for participants and the scope of permissible experiments.

In addition, various digital asset companies are also eligible for testing, such as exchanges, brokers, dealers, fund managers, advisors and custodial wallet providers.

Participants must also clearly define the scope of their services to limit potential risks. Sandbox trials should not run for more than one year from the approval date, with provisions for possible extensions if necessary.

Thailand Crypto Position

So far, Thailand’s stance towards crypto has been welcoming compared to other regions. Before the current crypto regulatory sandbox, the country has since tried to be friendly with its approach to the crypto market.

Thailand’s Ministry of Finance in February removed value-added tax (VAT) from crypto asset trading. The announcement said the move was made “to push Thailand to become a digital asset hub.”

The Ministry of Finance has announced the VAT exemption on digital asset trading, in a bid to boost capital mobilisation through digital assets and make Thailand the regional digital asset hub, said Paopoom Rojanasakul, secretary to the Minister of Finance. #ThaiPBSWorld #Thailand #VAT

— Thai PBS World (@ThaiPBSWorld) February 6, 2024

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