The Securities and Exchange Commission (SEC) has launched a public hearing on introducing the Travel Rule for digital assets, a move aimed at improving the traceability of digital asset transactions and bringing the country's regulatory framework into line with international standards.
As the regulator seeks to strengthen anti-money laundering (AML) oversight, the proposed rules would require licensed digital asset business operators to collect, verify and transmit information accompanying digital asset transfers.
The measures would enable authorities to better monitor suspicious transactions and reduce the risk of cryptocurrencies being used for money laundering, terrorist financing, cybercrime and other illicit activities, the SEC said in a statement.
The move is part of the SEC's broader efforts to strengthen cooperation with government agencies and the private sector in combating financial crime. It follows a resolution by the sub-committee on Financial Data Connectivity for Enhancing the Monitoring of Suspicious Financial Transactions, under which the SEC and the Anti-Money Laundering Office (Amlo) agreed to introduce interim regulatory guidance while Amlo develops more comprehensive regulations under the Anti-Money Laundering Act.
According to the SEC, the proposed framework is intended to ensure that sufficient information accompanies every digital asset transfer, enabling regulators to identify the origin of transactions, trace the movement of funds, and detect suspicious activity more effectively.
Under the proposed draft, digital asset business operators would be required to establish comprehensive risk management policies covering both incoming and outgoing transfers. They would also be required to collect and verify customer and counterparty information, conduct due diligence on other digital asset service providers involved in transactions, and verify the ownership or control of self-hosted wallets whenever digital assets are transferred to or from private wallets.
Operators would also be required to retain transaction records for at least five years, with records from the first two years readily available for inspection by supervisory authorities.
The draft further strengthens information-sharing requirements across the digital asset ecosystem. Service providers initiating a transfer would be required to transmit information on both the originator and the beneficiary alongside the transaction.
Where intermediary service providers are involved, operators must verify their eligibility and implement appropriate safeguards to ensure complete and continuous monitoring throughout the transfer process, according to the statement.
Receiving institutions would likewise be required to collect and verify information relating to both the sender and the recipient before accepting digital asset transfers, regardless of whether the assets originate from another regulated service provider or directly from a customer.
"The Travel Rule is intended to strengthen regulatory oversight without placing unnecessary compliance burdens on licensed digital asset businesses. Instead, it aims to strike a balance between supporting innovation and enhancing safeguards against illicit financial activities," the regulator noted.
By improving the traceability of digital asset transactions, the new rules will reinforce Thailand's AML framework, strengthen efforts to combat cybercrime, and reduce the risk of digital asset platforms being exploited for illegal activities, it added.
The SEC is accepting public comments on the draft regulations until July 10, after which it will review the feedback before finalising and issuing the new rules.
