Thailand proposes tighter scrutiny of funders behind crypto firms

Thailand’s securities regulator is seeking to curb money laundering and technology-related crimes by tightening funding rules for cryptocurrency companies.

The Securities and Exchange Commission of Thailand (Thai SEC) on Monday proposed expanding approval requirements for crypto businesses to include financiers behind major shareholders.

Under the proposal, any person providing backing or financial support to major shareholders would itself be treated as a shareholder requiring regulatory approval from the regulator.

The move aims to tighten oversight of hidden capital flows and ensure that business operators are funded from legitimate sources, rather than from financing linked to unlawful activities, which may pose legal, credibility and reputational risks, the agency said.

The move reflects an emerging regulatory trend in Asian countries, with similar initiatives under consideration in South Korea, where regulators are weighing proposals to cap crypto exchange shareholder stakes at 20%.

Indirect backing through share acquisitions would fall under proposed rules

The proposed funding requirements cover a wide range of financial contributors, including not only those who provide funding or financial support to direct shareholders, but also those who do so indirectly through share acquisitions.

The rules apply to acquisitions of shares in business operators, as well as in legal entities that are shareholders of those operators.

Source: Thai SEC

“The provision of significant funding shall include guarantors, contractual arrangements, or investments in any instruments that result in the financial supporter having the status of, or acting in substance as, a funding provider to such major shareholders,” the SEC said.

If a major shareholder is a government-related entity, such as a ministry, department, public organization or other agency, the agency will only review ownership at the entity level. “These entities are already subject to government supervision and oversight,” the regulator said.

The proposed measures are open for public consultation until April 22.

Thai authorities have been ramping up efforts to combat financial crimes recently. In January, local authorities launched a “gray money” campaign to tighten oversight across both physical and digital markets as part of an effort to close money-laundering loopholes.

Following efforts by the Thai SEC and the Thai Digital Asset Operators Trade Association, local crypto platforms reportedly froze 10,000 accounts as part of an anti-money laundering crackdown.