Thailand proposes tougher vetting of crypto funders

The Thai Securities and Exchange Commission (SEC) has published draft rules that would require licensed crypto exchanges, asset managers and custodians to disclose the identities of investors who provide significant funding and to verify the source of large investments.

Under the proposal, firms must identify beneficial owners, obtain official identity documents, trace the origin of large sums and retain detailed records that can be provided to regulators and law enforcement on request. The draft sets enhanced due diligence requirements for investors who cross specified funding thresholds or when transactions show signs of risk.

The measures include ongoing monitoring of investor activity, additional checks for politically exposed persons and automated reporting of suspicious transactions. The draft states these requirements are intended to reduce the use of the crypto sector for illicit financing and to give supervisors clearer information on who controls capital in crypto businesses.

The consultation paper is open for public comment. The SEC did not set a firm implementation date in the public outline, noting that specific thresholds, record-keeping periods and the timing of compliance requirements will be determined after feedback from market participants and legal advisers.

The proposed rules apply to centralized exchanges that match orders, firms that issue digital asset funds and custody providers that hold client assets. Smaller service providers subject to the licensing regime would be required to adopt proportionate checks. The draft is designed to work alongside existing licensing rules that set capital, reporting and operational standards for crypto operators.

The SEC wrote that the measures aim to align Thailand’s supervision of crypto activities with international anti-money-laundering and counter-terrorist-financing standards. The regulator noted that greater transparency about funders should assist cross-border cooperation and help prevent misuse of digital asset platforms for fraud or tax evasion.

Industry groups and some service providers raised concerns about the compliance burden. Firms said enhanced identity verification for international investors could be technically complex and might slow onboarding for legitimate customers. The consultation paper includes enforcement provisions and penalties for noncompliance but leaves the exact scale of fines and suspension mechanisms to be defined in the final regulations.

The SEC expects firms will need to invest in stronger compliance systems, staff training and secure record-keeping to meet the new obligations. After the comment period closes, the commission plans to review feedback and publish final rules; implementation timelines will depend on the complexity of the requirements and the changes firms must make to their compliance systems.

Thailand has regulated digital-asset trading and related services through securities law and a licensing system for several years. The SEC has previously introduced measures aimed at curbing scams and improving consumer protections on exchanges.