In an effort to enhance investor protection, Thailand’s Securities and Exchange Commission (SEC) has introduced new guidelines for digital asset service providers. These regulations address the risks associated with cryptocurrency trading and prohibit the use of customer funds for lending or investment.
Effective from July 31, 2023, the guidelines require digital asset service providers to display a clear and prominent warning message on their platforms. The message must inform users about the high-risk nature of cryptocurrencies and emphasize the importance of thoroughly understanding these risks before investing. Additionally, prior to using the service, customers must provide consent and acknowledge the associated risks.
One significant aspect of the new regulations is the ban on crypto lending services. This prohibits platforms from offering any returns on deposited cryptocurrencies by customers. By implementing this measure, the Thai SEC aims to safeguard investors from the potential risks posed by such lending services.
The need for investor protection regulations was identified following the crypto lending crisis that unfolded during the bear market in 2022. Several lending firms, including major players like Celsius and BlockFi, filed for bankruptcy, leaving investor funds trapped in lengthy bankruptcy proceedings. These incidents prompted discussions around establishing stricter rules to protect investors from similar situations.
The SEC’s decision to implement security warnings by cryptocurrency business operators was approved on September 1, 2022. Further discussions on regulations prohibiting digital asset business operators from providing lending services took place on December 1, 2022, and May 11, 2023.
By introducing these investor protection measures, the Thai SEC aims to mitigate the risks and vulnerabilities associated with cryptocurrency investments. These guidelines will promote transparency and ensure that individuals are well-informed about the potential pitfalls before engaging in cryptocurrency trading.
Overall, the Thai SEC’s move towards stricter regulations demonstrates its commitment to safeguarding investors’ interests and fostering a more secure environment for digital asset transactions in Thailand.