Thailand’s SEC Bans Crypto Staking and Lending; Mandatory Risk Disclosure for Exchanges

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Key takeaways:

  • Risk disclaimers are required by the SEC of Thailand for crypto traders; crypto merchants must provide users with clear warnings and their consent.
  • The SEC forbade digital asset business operators from providing deposit staking and lending services.

In order to ensure that investors are fully informed about the risks associated with cryptocurrencies, Thailand’s Securities and Exchange Commission (SEC Thailand) issued regulations on July 3, 2023, prohibiting operators of digital asset businesses from providing services and setting standards for cryptocurrency trading businesses to provide risk cautions.

Instead, support digital asset custody with earnings from deposit staking and lending to increase investor protection against the risks of such services. 

The regulations, which were implemented to protect investors, became effective on July 31. On August 30, an injunction barring deposit staking and lending took effect.

However, the SEC decided to forbid operators of digital asset businesses from offering services or supporting deposit staking & lending services at its meeting No. 12/2022 on September 1, 2022, and to require them to disclose warnings about the risks of trading cryptocurrencies.

At meetings No. 16/2022 on December 1, 2022, and No. 9/2023 on May 11, 2023, the authorities decided to accept upgrading the rules for disclosing risk warnings from cryptocurrency trading to be more appropriate. As a result, the SEC Thailand has continued to develop regulations for both of these subjects.

Operators of cryptocurrency trading centers, cryptocurrency brokers, and cryptocurrency traders must begin advising customers about potential risks associated with cryptocurrency trading as of July 31, 2023. Before customers use the service, the warning message, the results of an investment suitability evaluation and allocation, as well as the choice of the appropriate investment proportion (Basic Asset Allocation), must all be readily evident.

Additionally, the service provider must arrange for customers to give consent and acknowledge these risks prior to using the service. The SEC Thailand noted:

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

Operators of digital asset companies are prohibited from providing services or supporting deposit staking and lending services, including accepting deposits of digital assets and bringing digital assets to borrow from or invest in for the purpose of paying depositors’ returns. However, there are some restrictions listed in the notice that are permissible.

The SEC has also clarified that it will not permit platforms to accept deposits, use those deposits to borrow money, and then use that money to make investments that pay investors interest.

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