Major shareholders in digital asset ventures need SEC nod Operators must submit application

major shareholders in digital asset ventures need sec nod  operators must submit application

Representations of cryptocurrencies Bitcoin, Ethereum, DogeCoin, Ripple and Litecoin are placed on a PC motherboard in this illustration. REUTERS

Digital asset businesses are now subject to seeking the approval of the Securities and Exchange Commission (SEC) if they are set to have a major shareholder, the Thai regulator said yesterday.

According to an SEC statement, a digital asset business operator must submit an application for the approval of a person who is a major shareholder with the SEC as prescribed by a Ministry of Finance notification.

The application must be submitted within 14 days from the date that the digital asset operator knows the identity of the major shareholder. In the case that the major shareholder comes from a process to increase capital, an application for approval must be submitted prior to the date of the sale of capital increase shares resulting in such person becoming a major shareholder.

Major shareholder refers to a person who holds shares in a digital asset business operator, whether directly or indirectly, with more than 10% of the total voting rights of digital asset operators, according to the statement.

“The SEC currently regulates digital asset business under the Digital Asset Business Act B E 2561. Therefore the agency has duties and power on supervising the business to ensure that the operators are prepared and able to provide services to investors in accordance with business standards,” it noted.

The SEC now requires digital asset business operators under the supervision to be ready in three main areas. First, they must have sufficient capital to support their business operations, and be able to protect customer assets and compensate for the damages potentially caused to the customers.

Also, digital asset business operators must have a work system to operate their business efficiently, responsibly and in accordance with the law and regulations, including relevant business standards. Additionally, the major shareholder, directors or executives of digital asset business operators must have appropriate qualifications and must not have characteristics that are prohibited according to the rules prescribed by the Finance Ministry.

The Ministry of Finance, as set out on July 16, 2018, also set conditions that say a digital business operator must have enough personnel to meet the business volume, have knowledge and abilities, along with appropriate persons to perform the duties required as well as be honest and have no history of being derogatory.

In the case of a person who will be a major shareholder of a digital asset business operator having characteristics that are prohibited, the SEC has the power to prescribe conditions or periods for prohibiting a person from being a major shareholder, including the power to revoke the approval, according to the statement.

If the business operator has a major shareholder who has not been approved or whose approval has been revoked, digital asset operators must take action to rectify the aforementioned incidents within 90 days from the date of being notified by the SEC, it added.

If it cannot be rectified within such a period, the SEC has the power to order business operators to refrain from expanding their business or temporarily suspend their business operations to protect and preserve the interests of investors, it added.