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A look at how ICOs are regulated

Susan Foong Dec 31, 2018

In recent years, the rapid growth of the market for cryptocurrencies and the increasing trend to raise funds through issuance of tokens , known as initial coin offerings (“ICO”) have resulted in inconsistencies in the regulation of ICOs across the world.

Depending on the jurisdiction, digital tokens can take different forms including a security, utility token or digital currency. Unlike IPO shares which give investors a stake in the issuing company, digital tokens issued in an ICO give holders access to the products or services that the ICO issuer is developing. However, the ICO issuer and the project it is developing are typically at a very early stage and may be no more than an idea set out on a “white paper” at the time of the ICO. This article looks at the approach regulators in certain countries in ASEAN have taken towards regulating ICOs.


In a statement made in 2017, the Securities and Exchange Commission (SEC), Thailand acknowledged the potential of ICO in answering start-ups’ funding needs. In cases where an ICO constitutes offering of securities, the issuer will need to comply with applicable regulatory requirements under the Thai SEC’s purview. The SEC subsequently recognised that the ICO may not fit into the country’s regulatory framework and was considering appropriate approaches on regulating ICO that can strike a balance between supporting digital innovation and protecting investors.

In 2018, the Thai SEC issued new legislation to regulate and supervise the offering of digital assets (which includes cryptocurrencies, digital tokens and any other electronic data unit as specified by the SEC) and businesses undertaking digital asset-related activities, including exchange, brokerage and dealing. With the legislation, the offering of newly issued digital tokens to the public must be conducted only by limited companies or public limited companies on the condition that such issuers have already filed the registration statement and draft prospectus with and obtained approval by the SEC. Such offering must be carried out through an ICO Portal recognized by the SEC Board. There is ongoing reporting duty to the Thai SEC Office with respects to the issuer’s financial condition and operations. Entities wishing to operate a digital asset business must obtain the Minister for Finance’s approval and meet SEC requirements.


In early 2018, Bank Indonesia emphasised that virtual currency including bitcoin is not recognised as a legal payment instrument and is prohibited to be used as a payment instrument in Indonesia. Bank Indonesia also prohibited all payment system service providers and financial technology providers in Indonesia to process payment transactions with virtual currency. It reiterated that every transaction that has the purpose of payment or other obligations that must be met with money, or other financial transactions carried out in the territory of the Republic of Indonesia should use Rupiah.

Bank Indonesia issued warning to all parties not to sell, buy or trade virtual currencies. This is in line with Bank Indonesia’s commitment to maintain financial system stability, protecting consumers and preventing money laundering and terrorism financing.


In a public cautionary statement on Initial Coin Offering (“ICO”) made in early 2018, Securities Commission Malaysia (“SC”) and Bank Negara Malaysia (“BNM”) warned issuers of ICOs to be mindful that the launching of an ICO, the offering of digital tokens in exchange for digital currency or any form of payment and incidental activities thereof, may trigger regulatory requirements under the securities laws. The SC and BNM also reminded the public that no person is permitted to carry out any regulated activities such as fundraising, fund management and dealing in capital market products without obtaining necessary approval or authorisation from the SC.
The members of the public are reminded to exercise caution before participating in an ICO and are advised to refer to the list of institutions that are licensed or approved to carry out regulated activities under the laws administered by the SC and BNM.

In addition, ICO operators are prohibited from undertaking regulated activities such as deposit taking and banking business, foreign exchange administration activities and remittances, without the necessary authorisation under financial services laws administered by BNM.

Reference: ASEAN Resource Centre
Thailand (
Malaysia (
Indonesia (


DISCLAIMER: All opinions, conclusions, or recommendations in this article are reasonably held by Baker Tilly at the time of compilation but are subject to change without notice to you. Whilst every effort has been made to ensure the accuracy of the contents in this article, the information in this article is not designed to address any particular circumstance, individual or entity. Users should not act upon it without seeking professional advice relevant to the particular situation. We will not accept liability for any loss or damage suffered by any person directly or indirectly through reliance upon the information contained in this article.

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Susan Foong
Partner & Practice Leader | FCA (Singapore), FCCA

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