During the first quarter of 2022, Thailand’s Securities and Exchange Commission (SEC) announced a series of notifications aiming to strengthen the regulatory regime for digital assets while safeguarding investors’ interests. The updated rules and conditions apply to digital asset business operators licensed by the SEC. The key features of the new notifications, which took effect in March and April 2022, are summarized below. Custody of customers’ assets (effective March 1, 2022) As custodians of their customers’ assets, digital asset business operators must: Segregate customers’ assets in their custody so that the operators can clearly identify which assets belong to which investors. If customers’ digital assets are to be deposited with a third party, the operators must inform the customers accordingly. Refrain from seeking benefits from customers’ assets in any manner other than the purpose for which the assets are held. This includes refraining from using customers’ assets to provide benefits to others or to the customers themselves, and from depositing customers’ digital assets with a custodian that intends to lend out the digital assets (but does not include giving the customer’s assets to a licensed digital asset fund manager for investment in digital assets). Reconcile customers’ assets and keep evidentiary documentation for a period of at least five years. Privacy coin services (effective April 1, 2022) Digital asset business operators are prohibited from providing privacy coin services that can conceal (or allow the concealing of) specific transactional information, such as data about the transferor, the transferee, and the transfer amount. Digital asset business operators that provided privacy coin services to customers before the effective date of these new regulations may continue to provide such services, but they must arrange for their customers to disclose at least the required transactional information or agree not to engage in information concealment. Digital assets as a means of payment (effective April 1, 2022) Digital asset business operators are prohibited from using digital assets as a means of payment and must not provide any services or undertake any activities that encourage or promote the use of digital assets to pay for goods or services. This includes: Representing to any customer (through an advertisement, etc.) that the business operator will accept payment for goods or services using digital assets; Establishing a system or tool facilitating the use of digital assets to pay for goods or services; Providing e-wallets for the purpose of using digital assets as a means of payment; Providing a service for transferring THB-denominated funds from a customer’s account to third-party accounts; Providing a service for transferring digital assets from a customer’s account to third party accounts in order to pay for goods or services; and Providing any other services that support the use of digital assets to pay for goods or services. Business operators must take action (e.g., warnings, account suspension or termination, etc.) against customers who fail to comply with service terms and conditions. Providing customers with activity reports (effective March 30, 2022) The SEC now requires digital asset operators to provide their customers with a report, within one business day of a transaction, containing specific information about the customers’ digital asset trading, exchanging, and investment activity. Operators must retain the disclosed information for at least 18 months. Although the requirement came into effect on March 30, there is an initial implementation stage until April 30, 2022, during which operators only need to provide reports to their customers within a reasonable period of time upon request. The reporting requirement will be fully implemented from May 1, 2022, onward. For more information on the latest SEC rules and regulations for digital assets, or on any aspect of digital asset business or cryptocurrency in Thailand, please contact Kobkit Thienpreecha at [email protected], Onunya Chanpen at [email protected], Sorawit Partomtanasarn at [email protected], or Napassorn Lertussavavivat at [email protected]

Thailand’s Board of Investment (BOI) recently published BOI Notification No. Sor. 8/2564, which extends the scope of investment promotion covering electronic vehicle (EV) industry manufacturers to include the production of “automotive platforms” for electric vehicles, and creates a new category of BOI promoted activities covering the manufacture of electric bicycles (E-bikes). Automotive Platforms The following investment promotion categories have been extended: 4.24 – Manufacture of Battery Electric Vehicles 4.26 – Manufacture of Electric Battery Tricycles 4.27 – Manufacture of Electric Battery Busses and Trucks These categories now include the manufacture of “automotive platforms”—which must include an energy storage system, charging module, and front and rear axle module—benefiting from similar tax incentives and subject to additional conditions, as detailed below. New BOI Promotional Category for E-Bike Production The BOI has also introduced a new category, No. 4.28, covering the manufacture of E-bikes. Projects under this category will be eligible for a three-year CIT exemption with an additional one-year exemption if certain criteria are met. Applications for this category must cover the manufacture of E-bikes, the manufacture or sourcing of electric batteries, and a management plan for used batteries. In addition to the general conditions for EV projects (industrial standards, manufacturing timelines, etc.), the BOI has also imposed the following conditions specific to E-bike projects: E-bike frames must be produced from light-weight materials such as aluminum alloy, chromium–molybdenum alloy steel (chrome moly), titanium alloy, and carbon fiber; and E-bike batteries must adopt environmentally-friendly technology. Interestingly the BOI allows E-bike production lines to jointly use manufacturing lines for ordinary bicycles. However, the sale of ordinary bicycles is regarded as non-BOI-promoted income and will not be entitled to BOI tax incentives. These new provisions, intended to stimulate both local and foreign investments in the electric automotive industry, seem to complete the BOI promotion scheme for the full range of electric vehicles. They will hopefully accelerate the expansion of Thailand’s electric vehicle production market, and the adoption of environmentally friendly vehicle technology in Thailand. For more details on any aspect of investment promotion in Thailand, please contact Napassorn Lertussavavivat at [email protected] or +66 2056 5662, or Supasit Saypan at [email protected] or +66 2056 5994.

The new notification allows BOI promoted companies in the TISO and IBC categories to conduct lending activities with affiliated companies in the same group, subject to certain conditions and requirements.

As part of its membership in Lex Mundi, Tilleke & Gibbins has published an updated edition of its Guide to Doing Business in Thailand for 2021. This guide outlines all of the key factors for starting and operating a business in the Thai market. Issues covered include: Investment incentives Financial facilities Exchange controls Import and export regulations Structures for doing business Requirements for the Establishment of a Business Operation of the Business Cessation or Termination of the Business Labor legislation, relations, and supply Tax Immigration requirements This publication is part of Lex Mundi’s Guides to Doing Business series prepared by member firms in more than 100 jurisdictions worldwide. The guides serve as a useful resource when planning an international business strategy or researching a new market.