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Highlights
- SEC of Thailand has recommended revoking Zipmex's digital asset business license due to regulatory challenges and operational suspensions initiated on February 1.
- Zipmex failed to meet the SEC's requirements for a net capital increase and rectify management structure deficiencies by the given deadline.
- The SEC has charged former Zipmex CEO Akalarp Yimwilai with corruption, highlighting ongoing scrutiny amid the exchange's operational challenges since 2022.
Thailand’s Securities and Exchange Commission (SEC) has proposed the withdrawal of the digital asset business license of the Zipmex cryptocurrency exchange. This announcement was made on February 23 and is likely to be seen as a watershed event in the country’s regulatory landscape for digital assets. The recommendation to the Finance Ministry followed a set of regulatory obstacles faced by Zipmex, including a business operation suspension from February 1.
The SEC’s decision is based on Zipmex’s inability to comply with the increase in net capital requirement and to rectify the shortcomings in the personnel and management structure. The regulatory body deemed these gaps inappropriate and inadequate. The 15-day ultimatum was issued on February 1 for the exchange to comply with these conditions, which it failed to meet. The failure has also resulted in the current recommendation for license revocation and the strict regulatory environment imposed on Thailand’s digital asset exchanges.
SEC Charges Zipmex CEO Amid Exchange Troubles
The operational challenges appeared for Zipmex in 2022 when the company froze withdrawals because of the exposure to troubled crypto lenders, causing huge customer disruptions. Even though it resumed access to some wallets in a matter of days, the exchange remains under scrutiny from the SEC. This involves allegations of corruption against its CEO, Akalarp Yimwilai, making it even more challenging to gain full regulatory standing. The exchange’s maneuver of these challenges through possible acquisitions and strategic investments, one of which was a failed acquisition attempt by Coinbase, points out the unstable nature of the digital asset market and regulatory compliance.
The suspension of Zipmex’s business operations, since the client can claim back their assets by March 11, manifests the SEC’s resolve to protect investors. After March 11, Zipmex must ensure the unclaimed assets are held in a trusted system for legal accountability and transparency in its winding-down process. Unless Zipmex is liquidated, it will continue to exist as a corporate entity with all the rights, duties, and potential legal liabilities, even if the license is revoked.
Thailand’s Digital Asset Vision and VAT Exemption
In a broader context, the Thai Finance Ministry’s recent move to exempt value-added tax (VAT) on digital asset trading from January 1, 2024, signals a significant policy shift towards fostering a conducive environment for cryptocurrency and digital token trading. This exemption is part of Thailand’s strategic efforts to position itself as a regional leader in the digital economy, encouraging innovation and investment in the digital asset sector.
The VAT exemption reflects the government’s recognition of the potential of digital assets to contribute to economic growth and innovation. By removing tax barriers, Thailand aims to attract digital asset businesses and investors, enhancing its competitiveness in the global digital economy. This policy is expected to stimulate activity in the cryptocurrency market, boosting the country’s digital economy aspirations.
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