The Securities and Exchange Commission of Thailand ('SEC') announced, on 17 January 2023, the issuance of regulations requiring digital asset business operators that provide custody of clients' digital assets to establish a digital wallet management system to accommodate efficient custody of digital assets and cryptographic keys and ensure the safety of client assets.

In particular, the SEC explained that the regulations mandate entities to establish, among other things:

• policy and guidelines for overseeing risk management and management of digital wallets and cryptographic keys, as well as channels of communication and internal controls;
• policy and procedures for designing, developing, and managing digital wallets, as well as cryptographic keys in a secure manner; and
• a contingency plan in case of the occurrence of any event that may affect the management system of digital wallets and cryptographic keys, including laying out and testing action procedures, designating responsible persons, and reporting the event.

Moreover, the SEC detailed that an audit of system security and digital forensic investigation is required under the regulations in case of any event affecting the security of systems related to digital asset custody, which could cause significant impacts on client assets.

Notably, the SEC highlighted that, although the regulations took effect on 16 January 2023, digital asset business operators, who had provided custody of client assets prior to the entry into force of the regulations, are required to fully comply with the same within six months from 16 January 2023.

You can read the announcement here.