Thailand has become the second country in Southeast Asia to prohibit crypto exchanges from providing lending services, with a strong focus on prioritizing investor protection within their cryptocurrency strategy.
It was reported earlier that Singapore is implementing a ban that restricts exchanges from providing retail customers with staking and lending services.
The Securities and Exchange Commission (SEC) of Thailand made an announcement today, unveiling rules that mirror the regulations implemented by Singapore.
The announcement clearly specifies that the ban encompasses “depository services that offer returns to depositors and lenders,” effectively prohibiting exchanges from offering both lending and staking services.
The Securities and Exchange Commission (SEC) of Thailand has additionally implemented a requirement for a prominent trading risks disclaimer that must be visible to customers. The disclaimer states: “Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly, because you may lose your entire investment.”
Exchange operators have the responsibility to ensure that users are fully aware of the risks involved before they provide their consent to use the service. Furthermore, investor suitability assessments will be conducted to determine the maximum amount that users are permitted to invest in cryptocurrencies.
Last year, the regulatory body prohibited cryptocurrency payments, but allowed consumers to invest in it as an asset.
The implementation of the new regulations is scheduled to take place on July 31, 2023.
Singapore was the first, followed by Thailand.
The recent announcement by the Securities and Exchange Commission (SEC) of Thailand is similar to an earlier announcement made by the Monetary Authority of Singapore (MAS) today. According to the announcement, exchange operators are not allowed to offer their retail clients any lending or staking services.
In addition, the MAS has introduced a new requirement for exchanges to transfer all customer assets into a Trust by the end of this year. This step aims to prevent the mixing and trading of customer funds and mitigate the potential for another devastating incident like FTX.
In November of the previous year, the FTX exchange, which operates on a multi-billion dollar scale, experienced a significant collapse when a bank run occurred on its native FTT token, revealing some financial mismanagement.
Soon after, it was discovered that FTX had transferred customer funds to its affiliated hedge fund, Alameda Research, in order to cover financial gaps resulting from poor trading decisions made by the latter.
Despite the event being in the past, regulatory bodies worldwide are using the FTX case as a reference point for identifying issues to address and regulate when it comes to exchange activities.
