SEC Curbs G-Token's Payment Role to Boost Investment, Not Speculation

Thailand's Securities and Exchange Commission (SEC) has moved to establish a clear regulatory framework for the government-backed digital token, or "G-Token," focusing on its role as an investment and savings tool while explicitly preventing its use for payments.


This initiative, which saw the Cabinet approve the G-Token's issuance on 13th May 2025, aims to support financial inclusion and leverage digital innovation within the capital market.


The G-Token, issued under the Public Debt Management Act B.E. 2548 (2005), is not classified as a financial instrument or security, meaning the Ministry of Finance is exempt from seeking SEC approval for its offering.

Despite this exemption, the SEC is actively involved in shaping its use.



Public Consultation on Digital Asset Regulations

In a significant step, the SEC has launched public hearings, inviting input from businesses and the public on six draft announcements. These proposals are crucial for defining the landscape of digital assets in Thailand and include:
 

• Establishing additional categories of digital tokens.
• Exempting certain digital token offerings from public offering regulations.
• Clarifying services that do not constitute digital asset exchange, brokerage, or dealing.
• Defining public advisory services not deemed digital asset advisory businesses.
• Outlining fund management activities that fall outside digital asset fund management.
• Setting out the criteria, conditions, and methods for digital asset business operations.

SEC's Role in a Dynamic Market

Pornanong Budsaratragoon, Secretary-General of the SEC, underscored the regulator's commitment to fostering a diverse investment landscape.


She stated that the SEC's mandate includes supporting and promoting various investment avenues, embracing technology to enhance capital market efficiency, and ensuring a fair and competitive ecosystem for financial products and services, complete with robust investor protection.


Regarding the G-Token, Pornanong confirmed that the SEC initiated a 15-day public consultation on its principles and related draft announcements on 26th May.


This regulatory framework addresses four key areas: the G-Token's characteristics, its offering process, trading services, and the secondary market system, all designed to accommodate future government G-Token issuances.


On the subject of risk, particularly credit risk given the Ministry of Finance's role as issuer, the SEC believes it will be "lower than other issuers."

To mitigate price volatility and manipulation, the SEC will implement "Indicative Price" guidelines, setting a reference central price to ensure future tokens are issued within appropriate ranges.


The SEC's existing market surveillance tools, including price alerts for unusual fluctuations, will also be applied to the G-Token's secondary market to ensure transparent pricing.

"We believe the G-Token will serve as an investment instrument, not a speculative tool," Pornanonh asserted. "Manipulating prices dramatically will be challenging due to our anti-manipulation measures, including legal frameworks and tools like Indicative Prices, which act like a ruler to ensure fair pricing."

No Payments, Only Investment and Savings

Addressing widespread concerns, the SEC unequivocally stated that it does not support the use of G-Tokens or any digital assets under the Digital Asset Act as a medium for payment for goods and services.

"We will implement Smart Contracts that prohibit inter-transfers and transfers of tokens out of exchanges to prevent their use as a payment channel, a concern raised by the Bank of Thailand," Pornanong explained. "Current regulations already prohibit digital asset businesses from using assets for normal purchases. Transfers of Thai Baht or tokens between individuals are simply not allowed. We have shut that door."

She added that these guidelines, developed in collaboration with the Ministry of Finance and the Bank of Thailand, also extend to the upcoming G-Token.

To ensure broad public access to saving and investment, the SEC will permit both digital asset and securities business operators to offer G-Token-related services, adhering to regulations from the SEC and other relevant bodies, including the Anti-Money Laundering Office (AMLO) and the Bank of Thailand.



G-Token's Contribution to Financial Inclusion

The G-Token is viewed as a crucial step in leveraging financial technology and innovation to enhance savings avenues and improve public access to investment – a key aspect of financial inclusion. This aligns with the SEC's strategic direction and the nation's drive towards a digital economy.


From an investor's perspective, the G-Token offers several benefits: accessible digital investment products issued by the government, the ability to trade on a secondary market for liquidity, and the option to invest with modest sums.


Distinguishing G-Token from stablecoins, the SEC clarified that G-Token's purpose is to promote savings and investment, with holders entitled to returns as determined by the Ministry of Finance.


This differs from stablecoins, which are cryptocurrencies designed to maintain a stable value for use as a medium of exchange, and are explicitly prohibited from being used for payments under the Bank of Thailand's Currency Act B.E. 2501 (1958).