Thailand’s Securities and Exchange Commission (SEC) has introduced new rules aimed at protecting investors in the digital asset industry. These guidelines require digital asset service providers to provide clear warnings about the risks associated with cryptocurrency trading. Platforms must prominently display a message informing users that cryptocurrencies are high-risk investments and that they could potentially lose their entire investment.
In addition to the risk disclaimer, the new regulations also prohibit digital asset service providers from using customers’ funds for lending or investment purposes. This move is intended to enhance investor protection by preventing platforms from offering returns on customers’ deposited cryptocurrencies.
The Thai SEC’s ban on crypto lending services is a response to the significant crypto lending crisis that occurred during the bear market of 2022. Numerous crypto lending firms, which had promised substantial returns and collected billions of dollars in customer deposits, collapsed during this period. Prominent lending platforms like Celsius and BlockFi filed for bankruptcy, leaving investors with their funds stuck in bankruptcy proceedings.
The discussions surrounding the new regulations for investor protection began in September 2022, with the SEC acknowledging the need for security warnings by cryptocurrency business operators to disclose the risks of trading cryptocurrencies. The rules prohibiting digital asset service providers from offering lending and deposit-taking services were discussed in subsequent meetings, with the regulations set to take effect from July 31, 2023.
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