Thailand launches regulatory sandbox to test crypto services

Financial regulators in Thailand are launching a new project to test cryptocurrency service implementations within a dedicated regulatory sandbox.

Thailand’s Securities and Exchange Commission (SEC) introduced the Digital Asset Regulatory Sandbox on Aug. 9. The sandbox aims to facilitate experiments and the development of new digital asset services.

“Interested parties are welcome to participate in the sandbox to test their digital assets-related services, promoting innovative development in the capital market under a framework of flexible regulation,” the SEC’s announcement notes, adding that the sandbox officially launches today.

Regulations for eligible service providers

The official launch of the Digital Asset Regulatory Sandbox in Thailand comes a few months after the Thai SEC board passed a resolution approving its establishment in March 2024.

The authority subsequently issued the regulations for eligible services, including participants’ qualifications and the scope of the sandbox trials. The eligible digital asset-related service providers included six services: Digital asset exchanges, brokers, dealers, fund managers, advisers and custodial wallet providers. The SEC noted:

“The sandbox participants must incorporate their innovations into the development of digital asset services in the Thai capital market or must participate in a sandbox of the money market regulatory agency.”

Among other qualifications, the Thai SEC will consider aspects like capital adequacy, work systems, management structure and other conditions to ensure that sandbox participants are well prepared to provide services within the framework.

The participants must also specify the scope of services to reduce potential risks and impacts that may occur during the sandbox period of no longer than one year from the approval date.

The SEC added that the participants may request an extension for their service testing period upon expiration of the sandbox.

Thailand adopts a more crypto-friendly stance

Thailand has emerged as a relatively friendly jurisdiction for regulating cryptocurrencies. While allowing crypto transactions, Thai regulators initiated some strict regulations to protect investors’ rights and maintain financial stability in the country.

In recent months, Thailand’s financial authorities have been shifting to a more crypto-friendly regulatory approach, approving several important initiatives.

In June 2024, the Thai SEC reportedly endorsed One Asset Management (ONEAM) as the first firm to launch a Bitcoin (BTC) exchange-traded fund (ETF) in Thailand. The fund has a policy to invest in 11 leading global funds, limited to wealthy and institutional investors.

Previously, the SEC amended local rules to allow some investors to gain exposure to the United States-listed spot Bitcoin ETFs in March 2024.

Also in March, the Thai government approved tax breaks for individuals holding investment tokens to promote the use of the tokens for fundraising.

In January, the Thai SEC lifted restrictions on retail investors purchasing digital tokens backed by real estate or infrastructure projects. Before the decision, retail investors were limited to investing a maximum of $8,500 in these digital assets.