The Thai Securities and Exchange Commission (SEC) Board has imposed new regulations that prohibit digital asset exchanges from trading Non-Fungible Tokens (NFTs). These prohibitions are likely to have effect on Meme Tokens such as Dogecoin and Fan Tokens, as well as NFTs.
NFTs certify a particular digital asset as unique and not interchangeable and can be tracked on blockchains, enabling owners to obtain a proof of ownership. NFTs have become increasingly popular over the past few years, particularly in selling digital artwork, as well as other luxury physical goods such as watches, sports collectables and even real estate.
The regulation was announced by the Board on Friday 11 June 2021 and has immediate effect to ban the trading of these digital assets. Importantly, the ban does not outlaw the issuance of the assets themselves but prohibits the ability to trade particular digital assets. A statement released by the SEC revealed the ban will be applicable on currencies that have “no clear objective or substance and whose prices are determined by social media trends.” The SEC Secretary-General, Ruenvadee Suwanmongkol, further stated that the prohibition will extend to digital currencies that have one or more of these characteristics:
✓ Are tokenized by the fame of influencers;
✓ Are unique and not interchangeable with digital tokens of the same category and type at the equal amount;
✓ Are digital tokens that are used in blockchain transactions and issued by digital asset exchanges or related persons.
The SEC has not provided a specific reason for the ban. However, increased scamming mechanisms to sell different NFTs to those advertised, as well as a need to protect investors from unrealistic valuation of digital assets are likely to have been considerations. A further potential concern for the SEC is the possibility of weak ownership rights, in the sense that NFTs have previously been issued by people who do not own the intellectual property for the digital asset.