After almost ten months of discussions, the Thai SEC has introduced new crypto regulations.
Thailand's regulatory body for securities, the Securities and Exchange Commission (SEC), is implementing stricter guidelines to enhance investor protection in the country's digital asset sector.
These updated rules stipulate that providers of digital asset services must be clear about the risks associated with crypto trading.
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Service providers are mandated to feature a prominently displayed warning that clearly states:
Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly, because you may lose the entire investment amount.
In line with these new guidelines, businesses must obtain the users' consent, acknowledging that they fully understand the associated risks, before they use any service.
Moreover, the new regulations forbid service providers from utilizing customers' crypto assets for purposes such as lending or investment. Starting July 31st, 2023, any form of crypto lending service offering a return on customer-deposited crypto will be strictly prohibited by the Thai SEC.
This move is part of the regulatory body's strategy to mitigate the risks that lending services pose to investors.
The genesis of these investor protection-oriented regulations can be traced back to September 1st, 2022 when the Thai SEC acknowledged the need for crypto businesses to disclose the inherent risks of trading cryptocurrencies.
Following this, further discussions during meetings on December 1st, 2022, and May 11th, 2023, led to the establishment of rules that restrict digital asset business operators from providing or supporting services related to deposit-taking and lending.
These protective measures follow the disastrous crypto lending crisis of the 2022 bear market, which saw many crypto lending firms, including major players like Celsius and BlockFi, filing for bankruptcy after promising large returns on billions in customer deposits.
Thus, Thai SEC's latest regulations represent an effort to prevent such financial disasters in the future, aiming to foster a safer environment for digital asset trading and investment.
