The Securities and Exchange Commission (SEC) is securing control of the trade of non-fungible tokens (NFTs) as it plans to require operators of NFT marketplaces to apply for a business licence.
Analysts expect tighter regulations will drive many market participants to flee to foreign platforms to avoid legal complications.
Although NFTs are not defined in the Digital Asset Business Act, their function as a coin that represents a holder's ownership or rights to some unique assets such as art, music, pictures or collectibles resembles those of investment tokens and utility tokens, which may subject them to the SEC's supervision under the law.
Each NFT is expected to be assessed on a case-by-case basis to find if its nature and conditions fall in any specific type of "digital assets" under the act. If it is used for a fundraising purpose, the exchange on which it is listed needs to apply for a licence to offer trading services of the token.
Sanjay Popli, co-founder of Cryptomind and owner of Merkle Capital, said many companies are preparing to launch their own NFT marketplaces in Thailand.
However, if this rule is implemented, they may abandon the plan and seek platforms abroad. The effect could be similar to 2018 when the SEC imposed controls on initial coin offerings (ICOs), which drove many companies to launch ICO projects abroad, he said.
Akalarp Yimwilai, co-founder and chief executive of Zipmex Thailand, said Zipmex is preparing to launch an NFT platform and is applying for a licence in the first quarter.
He said the regulation may decelerate the growth of NFTs in Thailand, but it will give investors more confidence in the industry if it is under the regulator's supervision.
There are four domestic NFT marketplaces: NFT1, Bitkub NFT, Coral and JNFT. Notable international NFT marketplaces include OpenSea, Axie Marketplace, Larva Labs/CryptoPunks, NBA Top Shot Marketplace and Rarible.