Thai SEC Blocks Bank Customers’ Crypto Assets for Lending and Investment

The Thai Securities and Exchange Commission (SEC) has introduced new regulations aimed at digital assets.

The guidelines state that digital asset service providers must provide comprehensive risk warnings to ensure awareness of the potential risks involved in cryptocurrency trading.

Enhance investor protection

On July 3, the Securities and Exchange Commission (SEC) of Thailand revealed new rules regarding digital asset trading and services, with details published in the Royal Gazette.

Key highlights include mandatory risk disclosure for cryptocurrency trading and a ban on deposit taking and lending services.

From July 31, 2023, cryptocurrency trading center operators, brokers and traders must provide a clear warning about the high-risk nature of cryptocurrencies, ensuring that users fully understand the potential loss of their investment.

Users shall also receive an assessment of investment suitability and information on appropriate investment ratios prior to accessing the Services, with their agreement to acknowledge the required risks.

In addition, starting from August 30, 2023, digital asset business operators are prohibited from providing deposit-taking and lending services, except for specific exceptions mentioned in the official notification. These regulations aim to protect investors and promote responsible practices in the digital asset industry.

With these rules going into effect in less than a month, it should be noted that these discussions began on September 1, 2022. Even during these initial discussions, it was agreed that cryptocurrency operators would be required to provide security warnings, disclosing the risks associated with cryptocurrency trading. .

Subsequent meetings, held on December 1, 2022, and May 11, 2023, focused on the rules surrounding prohibiting digital asset business operators from providing services or supporting deposit-taking and lending services.

Continuing trend in Southeast Asia

Following the recent trend in Southeast Asia, Thailand became the second country in the region to announce a ban on cryptocurrency exchanges that offer lending services. The move by the Thai regulators highlights their commitment to prioritizing investor protection in the cryptocurrency space.

MAS has introduced a new requirement for cryptocurrency exchanges to transfer all customer assets into a trust by the end of the year. This initiative aims to eliminate the mixing and circulation of client funds, and mitigate potential risks associated with incidents similar to the FTX disaster.

MAS’s proactive action seeks to enhance the security and protection of clients’ assets within the cryptocurrency ecosystem.

Despite strong regulations, Thailand continues to set its sights on continued development with its announcement in June to launch a retail CBDC pilot under a regulatory sandbox.

As reported by local media, three payment providers, Ayudhya Bank (Krungsri), Siam Commercial Bank and Singapore-based 2C2P, will collaborate with the Central Bank of Thailand on the initiative.