1. Thai SEC introduces regulations to protect investors in the digital asset sector.
2. Guidelines require comprehensive warnings about risks in cryptocurrency trading.
3. Prohibition on crypto lending services and use of customer funds for investment.

Thailand’s Securities and Exchange Commission (SEC) has introduced fresh regulations aimed at safeguarding investors in the digital asset sector.

Under the newly implemented guidelines, digital asset service providers are obligated to provide comprehensive cautionary notifications that emphasize the potential risks involved in cryptocurrency trading. Furthermore, all platforms are required to prominently display a notification stating the following:

Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly, because you may lose the entire investment amount.

Thailand sEC

To ensure transparency and informed decision-making, the warning message must be prominently displayed and acknowledged by customers before accessing the services. The business operator is responsible for facilitating this process, obtaining customer consent, and ensuring their awareness of the associated risks.

Additionally, the updated guidelines go beyond the trading risks disclaimer. They explicitly prohibit digital asset service providers from utilizing customer funds for lending or investment purposes.

Starting from July 31, 2023, the Thai Securities and Exchange Commission (SEC) has implemented regulations that prohibit crypto lending services. As a result, crypto platforms are no longer permitted to provide any type of return on crypto deposits made by customers. The primary objective of the SEC is to enhance investor protection by mitigating the risks associated with lending services.

The dialogue regarding investor protection regulations commenced on September 1, 2022, when the Thai SEC endorsed the requirement for cryptocurrency business operators to provide security warnings, disclosing the risks associated with trading cryptocurrencies. The discussions on the regulations that prohibit digital asset business operators from offering services or facilitating deposit-taking and lending services took place during meetings held on December 1, 2022, and May 11, 2023.

These newly introduced investor protection rules are a response to a significant crypto lending crisis that occurred during the bear market of 2022. Numerous crypto lending companies, which had amassed billions in customer deposits by promising substantial returns, experienced financial collapse during the bear market. Prominent lending firms such as Celsius and BlockFi filed for bankruptcy, leaving investors’ funds entangled in the bankruptcy proceedings.

Posted Date: July 11, 2023