Thailand SEC Revises its Net Capital Rules In Favor of Crypto Backed Firms

Godfrey Benjamin   Nov 19, 2020 02:28 2 Min Read


Thailand’s Securities and Exchange Commission has made an upward review of its Net Capital requirement for securities firms and derivatives brokers, a move that is set to benefit blockchain and cryptocurrency firms in the country. - 2020-11-19T102718.816.jpg

As reported by The Bangkok Post, the move by the SEC will help to serve the growing volumes on the Stock Exchange of Thailand (SET) and Thailand Futures Exchanges (TFEX), and digital asset (cryptocurrency) brokers in the country.

“To support the rising trading volume, the SEC revised its net capital (NC) rules for securities and derivative brokers to increase liquidity management in case of emergencies and adjust the risk value to be in line with the current market conditions and support digital business,” the report reads. “The revised NC rules are expected to help free up liquidity for securities firms that plan to enter new business such as open digital or cryptocurrency exchanges.”

According to the revised rules, the SEC will count cryptocurrencies as Capital Funds for firms. In the new revision, the SEC requires securities firms that provide cryptocurrency management for their customers to hold 1% of such funds that count as net capital in cold wallets and 5% of the entire asset valuation in hot wallets. Firms that have cryptocurrency holdings but not asset managers must have a 500,000 baht shareholder’s equity as the net capital requirement.

The net capital increment is similar to a move made by the United States Securities and Exchange Commission when it increased fundraising limits for businesses under its regulatory jurisdiction. As reported by Blockchain.News at the time, the fundraising limit also has a positive advantage for cryptocurrency firms as upcoming projects can have access to more funding particularly through Initial Coin Offerings (ICOs).

The latest move by the Thailand SEC and the US counterpart shows that regulators are increasingly easing up to make room for the growth that is set to envelop the blockchain and cryptocurrency ecosystem in the years to come.


Image source: Shutterstock

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