Thai Sec Nftsstevensdecrypt: On July 24, Thailand’s SEC announced that it is ordering all domestic cryptocurrency exchanges to delist tokens that lack “objective and underlying value” and whose price is mainly reliant on social media trends. NFTs were the first type of token named by the organization, but a lack of clarification indicates that any class of unregistered asset might be included in this order.
This announcement will undoubtedly have long-term consequences on the cryptocurrency industry in Thailand as well as globally. It remains to be seen whether and how exchanges will comply with the directive. In the meantime, it is important to define what exactly is meant by a “meme coin” and an “NFT,” especially in this context.
In the wake of Facebook’s July 2018 ban on cryptocurrency advertising, the blockchain community began to question whether cryptocurrencies shouldn’t be regulated as a type of security so they may be legally advertised. Beyond the obvious answer of “no,” the SEC’s decision brings to the surface a much more important question — which cryptocurrencies should be legally treated as securities?
In the United States, an “investment contract” is any security that “involves money [and] is held for investment and is one in which investors apply their money for the purpose of obtaining income or wealth.” If an asset is deemed to be an investment contract, then it is a security and subject to SEC regulation. Courts have interpreted that cryptocurrencies are characterized by the Howey Test, which states that a token is an investment contract if (i) there is an investment of money, (ii) there is a common enterprise, and (iii) buyers expect profits from the efforts of others.
The SEC’s decision to label some cryptocurrencies as investment contracts and others as non-securities, even if somewhat arbitrary, is becoming more common. In June 2018, the agency defined an ICO as either a security or a non-security based on the presence of the following three factors: (i) whether tokens are transferable, (ii) whether they can be bought or sold in secondary markets, and (iii) whether they represent any underlying value.