It was reported on 3 July 2021 that the Thai Securities and Exchange Commission (“SEC”) filed a criminal charge against Binance, the world’s largest cryptocurrency exchange platform, for operating without a business license from the SEC under the Emergency Decree on Digital Asset Businesses of 2018 (“Crypto Law”), a crime punishable with an imprisonment term from two to five years and a fine between 200,000 and 500,000 Thai Baht, plus a daily fine of 10,000 Thai Baht.
However, the Thai Crypto Law does not have any extraterritorial application, meaning that it only applies to businesses in Thailand, and that is where the core legal problem arises.
Essentially, the Thai SEC is arguing that, by posting ads on Facebook targeting customers in Thailand and having its website written in the Thai language, Binance is somehow operating a cryptocurrency exchange platform in Thailand, and hence, must obtain prior approval from the SEC under the Crypto Law.
It is unclear to us whether or not Binance has any office, employee, agent, or asset in Thailand, but we assume that it does not. Without such typical physical presence in Thailand, it would not be easy for the SEC to legally establish that Binance, in fact, operates its business in Thailand against the Crypto Law.
It has long been understood among foreign businesses that they would not have to be licensed by Thai government agencies to operate in Thailand as long as they do not have any physical presence or any agent here, especially in tech and e-commerce industries where such presence is not necessary because all services are exclusively provided via the internet.
There is still a long, long way before we have a conclusion on whether or not Thai courts would agree to the SEC’s legal position. But if they do, that could drastically change the legal landscape for many foreign businesses operating outside Thailand but targeting customers in Thailand because, based on a similar argument, other Thai government agencies could start filing criminal charges against offshore companies providing services into Thailand, especially the Department of Business Development (“DBD”) which is responsible for enforcement of the ultra-protectionism and overarching law called the Foreign Business Act (“FBA”).
The FBA, by itself and through various interpretations of it by the DBD, is already a highly controversial law because it generally prohibits foreign businesses from operating most businesses in Thailand, subject to certain exceptions which are also complicated by the DBD’s interpretations. The final verdict of the case between the SEC and Binance under the Crypto Law may not affect only the cryptocurrency market in Thailand but other business sectors subject to the FBA as well.
Written by Wayu Suthisarnsuntorn (wayu@pisutandpartners.com)
First published on 22 July 2021. ©
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