BY Risen Jayaseelan - June 13, 2018
Risen's Quick Take 0
Thailand’s new rules / Coinrail hack
Thailand’s new rules
So Thailand has released its regulations on the licensing of exchanges and ICOs. Our take:
- Thailand’s move is akin to that of Japan’s, namely coming up with new rules to govern the space, rather than trying to retrofit it into existing legislation, like the US. This means that Thailand is now leading the regulatory space in Asean by being the first to do this. It also means Thailand is now in uncharted territory and will be watched closely by other regulators.
- Thailand has created a new licensed group of operators, calling them ICO ‘portals’. All ICOs have to be offered through ICO portals which in turn need to be approved by the SEC. The portal’s role is an onerous one, having to screen the tokens, its promoters and whitepaper among others. It also has to look at the ICO offering for about a year, presumably similar to the role of sponsors for new listings on markets like the Hong Kong Stock Exchange. There already exists such players in markets like the US, where these platforms claim to conduct due diligence on ICOs and present them as vetted projects. The difference here is that Thailand’s SEC is the first to license such parties. But with duties come liabilities. So will there be takers?
Pundi X, a promising blockchain-based point-of-sale (POS) solution provider is in the news. About US$20mil of its NPXS tokens (equivalent to around 3% of its total supply) has been stolen from Korean exchange Coinrail which had been hacked. (Another US$20mil worth of other tokens were also stolen, but NPXS has lost the most and the hack is being linked to the current sell down in prices of cryptocurrencies.) PundiX has been quick to assure its token holders about the situation. It is very forthcoming with updates. The matter is out of their hands as it is in the hands of the Korean police and other regulators. The hope clearly is to try to retrieve the stolen tokens. PundiX co-founder and CEO tells CNA: Business is ongoing for Pundi X. It’s a temporary freeze to assist the Korean police investigation and to avoid the damage (of the exchange hack) it would bring to holders. We hope the freeze can assist Coinrail and Korean law enforcement to resolve the issue soon.”
How will PundiX deal with the situation if the tokens can’t be retrieved by use of the law? For all you know, these were done by North Korean hackers operating out of nondescript shop lots in Phnom Penh, Kuala Lumpur and Bangkok! (Just kidding as there is no proof of any of that.) More seriously though, many reckon that PundiX has the option of a hardfork to invalidate the stolen NPXS. However, this is not possible, as NPXS is on the ERC20 blockchain, i.e it is not their own blockchain protocol. PundiX has also told CNA that a hardfork is not an option for it but have stopped short of suggesting any solutions for now, considering that the matter is with the authorities. One option is for the exchange to compensate token holders but there is no indication that Coinrail has any ability let alone intention of doing so. It is a small exchange that has even come under flak from the Korean Blockchain Industry Association for not having enhanced security features. In the case of the January hack of Japan’s Coincheck, the largest so far of an exchange, it took full responsibility for the hack and spent US$435 million to compensate users. Recall also another option: Bitfinex issued new tokens to compensate victims of its 2016 hack. All eyes on Coinrail now.