Since September 2022, when the crypto loan crisis forced businesses like BlockFi and Celsius to go for bankruptcy, investor protection measures have been up for discussion.
The Securities and Exchange Commission (SEC) of Thailand has put new regulations in place to safeguard investors in the digital asset market. The guidelines’ main goal is to make sure that companies that provide services for digital assets issue sufficient cautionary statements about the dangers of trading cryptocurrencies.
A clear warning statement outlining the significant dangers associated with cryptocurrencies must be widely displayed by digital asset service providers as per the new legislation. Customers must consent and acknowledge the risks before utilizing the platform’s services, and the message must be prominently displayed.
The rules forbid suppliers of services for digital assets from using client cash for lending or investment. This action tries to protect investor assets and stop deposited cryptocurrency from being misused.
Since the Thai SEC has outlawed cryptocurrency lending services, cryptocurrency exchanges are not permitted to provide any kind of return on customer deposits. This choice seeks to safeguard investors from the dangers involved in lending services.
On July 31st 2023, the new rules are supposed to go into force. On September 1st 2022, when the SEC acknowledged the necessity for security alerts by bitcoin firm operators, discussions surrounding investor protection regulations were under way. On December 1st 2022, and May 11th 2023, additional debates about the ban on deposit-taking and lending services were held.
These investor protection regulations were put in place in response to a serious crypto loan crisis that happened in the midst of the 2022 bear market. A number of cryptocurrency lending companies, including well-known platforms like Celsius and BlockFi, filed for bankruptcy, trapping investor cash in the legal process. These occurrences demonstrate the dangers linked to lending services in the cryptocurrency sector.
By improving transparency and alerting consumers to the significant dangers associated with cryptocurrency trading, the new laws from the Thai SEC seek to improve investor safety. The SEC seeks to reduce the possibility of financial losses and fraudulent actions by banning lending services and limiting the usage of customer funds.
Thailand’s commitment to regulating the digital asset market and shielding investors from potential hazards is demonstrated by the adoption of these regulations. It is conceivable that regulatory authorities may impose additional controls as the cryptocurrency market develops in order to protect investors and uphold market integrity.