New SEC Regulation Bans Trade in NFTs and Gimmick Tokens

The Thai Securities and Exchange Commission (SEC) has prohibited digital asset exchanges from exchanging tokens in three categories: fan-based or meme-based tokens, exchange-issued tokens, and non-fungible tokens.

The regulator statement said the ruling was enacted on Friday with immediate effect but clarified that it is not retroactive.

It could affect tokenized arts or collectibles and so-called meme tokens like Dogecoin, which originated as a joke cryptocurrency and drove speculative frenzy. But its purpose is to rein in speculation in digital assets with no clear objective or substance.

The move followed reports that SET-listed Jay Mart has planned to launch the country’s first non-fungible tokens (NFTs).

The tokens would reportedly be linked to nine local stars and celebrities. Additionally, the move was intended to promote Jay Mart’s digital token JFin coin ecosystem, increasing the demand for various digital tokens in the crypto market.

NFTs have become a popular way to sell digital artworks, including some marketed for millions of dollars.

Those tokens certify a unique and non-exchangeable digital asset. Furthermore, one of their advantages is that they are tracked on blockchains, which provides owners with proof of ownership.

Ruenvadee Suwanmongkol, the SEC secretary-general, explained the regulation in detail on Friday.

According to Ruenvadee Suwanmongkol, exchanges are banned from exchanging utility tokens or cryptocurrencies that have any of these characteristics: not having clear objectives or substance, having prices dictated by social media trends, or it’s based on memes.

Cryptocurrencies tokenized by influencer or fan-based fame would also be banned, the regulator stated.

– The other characteristics that the SEC secretary-general mentioned were:

– It’s a digital creation to declare ownership or grant rights over an object or specific right.

– It’s a non-fungible token.

– It’s unique and not interchangeable with digital tokens of the same category and type in the same amount.

– It’s a digital token used in a blockchain transaction and issued by digital asset exchanges or related persons.

Also, under the new SEC’s regulation, exchanges must comply with and review their rules within 30 days, or they could face sanctions, including delisting of the digital token, the regulator said.