Thailand’s Securities and Exchange Commission (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 highlighting risks associated with cryptocurrency trading. All platforms must display a message that reads:
“Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly, because you may lose the entire investment amount.”
The warning message must be clearly visible, and before customers can use the service, the business operator must arrange for the users to give consent and acknowledge the risks.
Apart from a trading risks disclaimer, the new guidelines also prohibit service providers from using customers’ funds for lending or investment.
The Thai SEC has banned crypto lending services, thus prohibiting crypto platforms from offering any form of return on deposited crypto by customers. The SEC’s aim is to increase protection for investors from the risks of lending services. The new regulations are set to come into effect from July 31, 2023.
Related: Crypto exchange Bitkub targeted by Thai SEC with wash trading claims
The discussion around new regulations for investor protection began on Sept. 1, 2022, when the SEC approved the need for security warnings by cryptocurrency business operators to disclose the risks of trading cryptocurrencies. The rules prohibiting digital asset business operators from providing services or supporting deposit-taking and lending services were discussed during meetings on Dec. 1, 2022 and May 11, 2023.
The new investor protection rules come after a massive crypto lending crisis during the 2022 bear market. Several crypto lending firms, which collected billions in customer deposits by promising hefty returns, went bust during the bear market. Leading lending firms, including Celsius and BlockFi, filed for bankruptcy, resulting in investor money getting stuck in bankruptcy proceedings.
Magazine: Bitcoin 2023 in Miami comes to grips with ‘shitcoins on Bitcoin’
