The Securities and Exchange Commission of Thailand (SEC) has issued new rules for digital asset service providers focused on investor protection.
The new guidelines require digital asset service providers to offer adequate warnings that highlight the risks associated with trading cryptocurrencies. All platforms should display a message saying:
โCryptocurrencies are high risk. Thoroughly study and understand the risks of cryptocurrencies, as you may lose the entire amount of the investment."
The warning message must be clearly visible and before customers can use the service, the business operator must arrange for users to give their consent and acknowledge the risks.
Aside from a disclaimer about business risks, the new guidelines also prohibit service providers from using customer funds for loans or investments.
The Thai SEC has banned cryptocurrency lending services, prohibiting cryptocurrency platforms from offering any form of return of cryptocurrency deposited by customers. The SEC's goal is to increase investor protection against the risks of loan servicing. The new regulations will take effect from July 31, 2023.
Related: Bitkub Crypto Exchange Targeted By Thai SEC With Trade Laundering Claims
Discussion about new investor protection regulations began on September 1, 2022, when the SEC approved the need for security warnings by cryptocurrency trading operators to reveal the risks of cryptocurrency trading. The rules that prohibit digital asset business operators from providing services or during the meetings, the support services for the collection of deposits and loans were discussed on December 1, 2022 and May 11, 2023.
The new investor protection rules come in the wake of the massive crypto lending crisis during the bear market in 2022. A significant portion of crypto lending firms, which raised billions in customer deposits by promising strong returns, went bankrupt during the bear market. Major lending firms, including Celsius and BlockFi, filed for bankruptcy, resulting in the investor's money getting stuck in the bankruptcy process.
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