Photo credit: Thailand’s SEC/Regulation Asia

Thailand’s Securities and Exchange Commission (SEC) has launched a regulatory sandbox allowing digital asset service providers to test their products, services, and business models.

Starting Aug. 9, eligible digital asset operators in Thailand can apply to the SEC’s Digital Asset Regulatory Sandbox to promote “innovative development in the capital market under a framework of flexible regulation,” the regulator said in an announcement.

The regulator will choose among qualified digital asset operators, including cryptocurrency exchanges, brokers, dealers, asset fund managers, advisory firms, and custodial wallet providers, based on their capital adequacy, work systems, management structure, and compliance with relevant policies to ensure participants “are well prepared to provide services within the sandbox framework.”

Participants are required to outline the specific services they intend to offer to mitigate potential risks and limit any adverse impacts that might arise during the sandbox testing period, which cannot exceed one year from the date of approval. According to the Thai SEC, however, participants do have the option to request an extension for their service testing period once the initial sandbox period concludes.

Approved service providers will be obligated to integrate their solutions into the local digital asset services landscape within the Thai capital market or actively engage within the controlled testing environment of the sandbox, the regulator added.

The launch of the crypto regulatory sandbox follows months of deliberations among local authorities. In May, a month after the initiative was initially passed as a resolution, the SEC conducted a public hearing to gather feedback from stakeholders, and most respondents reportedly agreed with the principles and the proposed amendments to the governing regulations.

Thailand has recently ramped up its efforts in the crypto sector, aiming to strike a balance between fostering innovation and safeguarding consumers — penalizing non-compliance to local policies. In April, the Thai SEC said it would block unlicensed crypto exchanges to prevent money laundering and other illicit activities online.

The watchdog had also started cracking down on deceptive crypto ads, reminding operators to follow advertising standards, according to a report by The Bangkok Post.

Meanwhile, digital asset adoption is on the rise as the government expands social benefit payments in digital currency. However, the potential role of blockchain technology in these digital wallets remains uncertain, particularly given the central bank’s recent pilot for a retail central bank digital currency (CBDC).

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