Thai Securities and Exchange Commission (SEC) Announces Slew of Bans on Memecoins, Fan Tokens, Exchange Tokens and NFTs

The Thailand regulators are placing restrictions on a number of crypto assets including the lovable Dogecoin ($DOGE) as Musk plans to send DOGE-1 to the moon.

By
Chung Yee
on
June 15, 2021
Category:
Blockchain News

Thailand Restrictions Grow

Last Friday, the Thai Securities and Exchange Commission announced on their official website that meme coins, fan tokens, exchange tokens and Non Fungible Tokens (NFTs) will be banned in the country. The meme culture and the crypto craze hit a peak when Dogecoin ($DOGE) and Shiba Inu coin ($SHIB) started an impressive rally before the market corrected. Dogecoin was the fourth most valued coin at $70 billion when it was trading at $0.60. It now seats comfortably at a market capitalization of $41.8 billion. This massive volatility and the perceived lack of value are reasons for the regulators to take extreme caution. 

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The memecoin $DOGE soared thanks to the constant attention by Elon Musk giving it the exposure it needed. This includes his plan to send a satellite named ‘DOGE-1’ to the moon . Created as a parody, the trend seems to be catching up with wider adoption after the Dallas Mavericks began accepting payment in Dogecoin and its listing on Coinbase Pro. Another meme token, Shiba Inu coin, listed on Binance on May 10, 2021 and saw considerable surge in interest by retail investors. Yet the appeal of the novelty coin seems to have been lost to the Thailand SEC, who are more concerned about potentially negative market trends.

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Thailand adopting a very conservative approach was caused by discomfort with the swings in price based on social whims. This concern stems from the lack of clear objective and the absence of adjusted fundamentals in regulation. 


SEC’s Reason for Banning  

The regulator described meme tokens as having no clear objective or substance in justifying the ban. Their price moves depending on the trend in the social world. Fan tokens on the other hand are digital assets created by personal preference. Although this definition misses some of the crucial elements of the tokens, the authorities are of the opinion that fan tokens have no value. A deeper understanding of how fan tokens operate is explained in depth here. Non-Fungible Tokens (NFTs) that saw a massive growth this year were also misrepresented to be tokens for collectibles, virtual real estates and digital sneakers which cannot be traded in exchanges. The last category of coin are exchange tokens that allow for reduced transaction fees by the holders. 

Source: A piece of NFT art that was sold for $69.3 million 

It is easier to understand why the authorities have problems finding fundamentals in these tokens. The principles that they have applied to traditional stocks that are publicly traded are applied to these new categories of assets, which fails to correspond correctly to their intrinsic values. Oversimplification of a more complex utility and the underlying technology seems to apply to the regulators, thus reducing the value of these tokens in their eyes.

Finding an Equilibrium

While the concern over meme tokens has legitimacy, other categories of tokens banned by the Thai SEC have a stronger case. Fan tokens and exchange tokens arguably have real utility, which give them value. Ownership of exchange tokens to encourage participation on a certain platform are akin to granting of loyalty points. NFTs on the other hand have intrinsic values. That is why NFTs are not traded on exchanges but sold in a ‘marketplace’. The underlying issue is applying traditional ideas and concepts to a new asset class that works on a different set of parameters. It is an onerous task to develop new rules and framework for every category of crypto asset, but it is inevitable. 

The market will mature and technical clarity will develop over time. The regulators will need to find a healthy balance between protecting the average unsophisticated trader and allowing technology and innovation to take place. 

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance. His largest crypto holdings are Solana, Ethereum, and BNB Token.

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