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Deep Dive into the SEC’s Strategy to Promote Digital Asset Innovation

2025/11/20 02:48:02

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In an era where financial technology (FinTech) and digital assets are growing rapidly, regulators worldwide face the challenge of balancing innovation with investor protection. Thailand is no exception. The Securities and Exchange Commission (SEC) has set out to promote and develop digital asset innovations through creating a safe space for licensed digital asset businesses to trial their ideas (Digital Asset Regulatory Sandbox, or simply Sandbox), as a testing ground for financial innovations related to digital assets under a flexible yet tightly controlled risk framework.

What laws does the innovation trial or sandbox rely on?

The Sandbox is based on two key laws:

  1. The Securities and Exchange Act B.E. 2535 (1992) – Defines the SEC’s authority to promote and regulate the capital market to maintain stability and confidence.

  2. The Emergency Decree on Digital Asset Businesses B.E. 2561 (2018) – Defines “digital assets,” covering cryptocurrencies and tokens, and sets regulatory frameworks for businesses such as exchanges, brokers, dealers, and custodians.

Under these laws, the SEC has the power to issue announcements supporting innovation without compromising investor protection. For example, Announcement No. KorThor. 14/2567 specifies the nature of services for Sandbox participants without classifying them as fully licensed digital asset businesses.

What is the purpose of the Sandbox?

The Sandbox is designed to:

  • Support innovation – Allow testing of new services using technologies like smart contracts, AI, and automated payment systems.

  • Reduce regulatory barriers – Enable trials in a controlled environment without full compliance requirements during testing.

  • Assess risks before full approval – Ensure innovations are safe and effective before being widely adopted.

Who can join the Sandbox?

Participants must be licensed digital asset businesses in one of six categories:

  • Exchange

  • Broker

  • Dealer

  • Fund Manager

  • Custodian

  • Digital Asset Advisory

They must also meet key qualifications:

  • Clear innovation – Use new technology to improve or solve service issues.

  • Operational readiness – Adequate capital, systems, and personnel.

  • Risk management plan – Measures to protect users.

  • Feasibility study – Demonstrate viability.

  • Clean record – No prior Sandbox violations.

  • Defined scope and timeline – Testing limited to one year (extensions allowed).

  • Compliance with laws – Including KYC/CDD, AML/CFT, and strict investor protection measures.

Regulatory principles for the Sandbox

The SEC applies the principle of “Same Activity, Same Risk, Same Regulatory Outcome”, meaning regulation is based on risk, not discrimination. Key focuses include:

  • Investor protection (e.g., suitability and knowledge tests).

  • Anti-money laundering and preventing misuse of digital assets.

  • Transparency and building trust in the system.

Current status

Currently, three businesses have been approved to test under the Sandbox, all of which have completed the trial. An example of the trialed innovation is programmable payment, which was under joint supervision of both the SEC and the Bank of Thailand.

(Reference: Thai Digital Asset Regulatory Sandbox)

 ⚠️ Disclaimer: Cryptocurrency and digital token involve high risks; investors may lose all investment money and should study information carefully and make investments according to their own risk profile.

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