Bangkok, 24 February 2021 – The Securities and Exchange Commission (SEC) has amended the regulations on supervision of initial coin offerings (ICO) with real estate underlying or real estate income stream (real estate-backed ICO) to be more comparable to real estate investment trusts (REIT) regulations. To become effective on 1 March 2021, the amended regulations aim to enhance proper investor protection mechanisms and support the business models of the private sector.
Real estate-backed ICO is in the form of fundraising and benefit
generation similar to REIT. However, the regulations governing real
estate-backed ICO with regard to investor protection mechanism are different
from REIT regulations. For example, the real estate-backed ICO currently lacks a
mechanism for monitoring and overseeing the management of assets and for protecting
the interest of digital token holders.
The SEC has therefore amended the regulations governing
supervision of real estate-backed ICO, as part of the short-term implementation
plan to tighten supervision of digital token offering and to strengthen proper investor
protection mechanisms. Pursuant to the amended regulations, investors’ rights will
be protected fairly according to the characteristics, forms and risks of the
investment products, including flexibility and relevance to the business models
of the private sector, in line with the SEC’s short-term implementation plan,
as follows:
(1) Allowing leasehold
contracts to be another underlying asset in addition to the current real estate
and shares of special purpose vehicles (SPV)
which hold real estate accounting for at least 75 percent of the voting rights
of such SPVs;
(2) Revising the amount or value of the investment
to be more flexible by allowing it to be at least 80 percent of the whole project
or not less than 500 million baht, as
opposed to the current requirement of investment proportion only;
(3) Requiring the token issuer
to take additional duties in managing assets and to provide a mechanism for
protecting investors’ rights. For example, having personnel readiness and work
systems related to duty performance and establishing preventive measures and
effective handling of conflicts of interest;
(4) Requiring the trustee to perform additional
duties. For example, monitoring and overseeing the issuer’s asset management according
to the governing regulations. In this regard, the trustee must be well prepared
and independent in performing duties, and put in place measures for handling
conflicts of interest.
The
amended real estate-back ICO regulations will take effect from 1 March 2021
onwards.
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