Southeast Asian countries are taking prudent steps to shield investors from the risks of the highly volatile crypto market. Following Singapore’s lead, Thailand is also prioritizing the security of its investors by tightening its regulatory grasp on the crypto space.
Recently, Thailand’s Security and Exchange Commission (SEC) rolled out a clear set of rules for crypto exchanges operating in the country. The guidelines include putting a ban on crypto firms from offering or facilitating deposit-taking and lending services. Another rule SEC introduced is requiring crypto operators to disclose a mandatory disclaimer of trading risks for investors on their websites.
The Thai’s SEC published the news on its official website and Twitter handle on July 3, 2023 Monday. These rules have been in the making for years to promote more transparency and caution in the crypto trading space.
Thailand has been striving to change the landscape of the country’s crypto ecosystem since the massive crypto collapse of September, 2022. During this bearish market state, many famous crypto lending companies (e.g., Celsius, BlockFi) faced severe financial collapse and filed for bankruptcy. Since these firms supported crypto trading, this huge collapse ended up trapping billions of investor’s funds.
To prevent a repeat of this disastrous event, Thai’s SEC regulators conducted various crucial meetings during Sept 2022-Dec 2022. The fruition of these meetings came in the form of the aforementioned guidelines that finally received official approval in May 2023.
Thai’s SEC Bans Crypto Lending and Staking Services
As per the announced regulations, it is firmly prohibited for the crypto operators to use investors’ capital for lending and investment purposes. Under the rule, the exchanges can no longer offer or support any kind of returns on the customer-deposited currency.
The official SEC’s notification said crypto businesses are forbidden to “accept digital asset deposits by giving or proposing to give returns from depositing digital assets or other returns to depositors (such as from the company’s marketing budget).” However, it was further mentioned that these deposits are eligible for returns only if they are a part of sales promotion activities approved by the SEC rules.
Additionally, the regulator has also forbidden exchanges from attempting to advertise or persuade the general public to support their staking and lending services.
With this pivotal move, Thai’s SEC has outright banned crypto lending in the country to safeguard investors from the risks of lending services. The new guideline is set to be effective from August 30, 2023.
Thailand Mandates Disclosing Risk Warnings of Crypto Trading
The Thai’s SEC is set on its path to make the country’s crypto ecosystem more safe and less-risk inducing for the investors. According to the SEC, it is mandatory for exchanges to provide customers a clear disclosure of risk warnings of crypto investing.
The announcement states crypto businesses are required to display clearly visible risk warnings and the message should read: “Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly because you may lose the entire investment amount.”
Crypto businesses must ensure that users consent and acknowledge the risks before using the service for investing purposes. Moreover, the customers should receive their investment suitability assessment results to determine their appropriate investment proportions. The published guideline will be in effect from July 31, 2023.
The Thai’s SEC has been putting investors’ protection in the forefront of its crypto regulation policy for years. The regulatory body issued an announcement on September 1, 2022 requiring crypto companies to disclose investment risks and warnings while advertising their services. With these significant steps, Thailand’s SEC is ensuring customers are well-informed before they dive into the world of crypto.
Source: The Coin Republic