Thailand's Securities and Exchange Commission (SEC) has amended its digital asset regulations to permit the offering, trading, and provision of services related to tokenized environmental commodities by licensed digital asset exchanges, brokers, and dealers. This regulatory development is aimed at facilitating Thailand's green economy and net-zero goals while diversifying the products available in the regulated digital assets market.
The environmental commodities currently being traded on certain market platforms and via over-the-counter channels include:
- Carbon credits: Tradable certificates representing a reduction of CO₂ emitted into the atmosphere.
- Renewable energy certificates (RECs): Tradable proof of electricity generated from renewable energy sources.
- Carbon allowances: Tradable permits to emit a capped amount of greenhouse gases.
The tokenization of these instruments is essentially the process of converting them into digital tokens, making it possible to list them on blockchain exchanges for trading purposes.
Background
Tokenized carbon credits, RECs, and carbon allowances fall under the category of utility tokens for consumption purposes or tokens representing entitlement certificates—that is, group 1 utility tokens, which are not considered financial products. The offering, trading, and provision of secondary-market services of this type of token are exempted from licensing requirements for regulated digital asset businesses under the Emergency Decree on Digital Asset Businesses B.E. 2561 (2018).
Under the previous regulatory framework, licensed digital asset business operators were not allowed to provide services involving such unregulated tokens, as it was deemed to be engaging in "other businesses," which digital asset operators generally cannot engage in without prior SEC approval.
Regulatory Amendment
Under the amended digital asset regulations, licensed digital asset exchanges, brokers, and dealers may now apply for SEC approval to offer services related to these tokenized assets as "other businesses," including listing them for trading on digital asset exchanges.
Apart from requiring operators to comply with the general conditions for operating "other businesses," the SEC has imposed the following additional requirements for tokenized carbon credits, RECs, and carbon allowances:
- Robust token screening mechanisms to ensure reliability, integrity, and regulatory compliance.
- Adequate disclosure of token information to enable investors to make informed decisions.
Outlook
This amendment demonstrates the SEC's willingness to relax digital asset regulations in targeted areas where digital innovation supports government policy objectives, and it paves the way for tokenization of carbon credits and renewable energy assets, expanding financing and trading options in the environmental sector.
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