July 7, 2023
By Anjali Kochhar
In a move echoing Singapore’s recent decision, Thailand has become the second Southeast Asian country to announce a ban on cryptocurrency exchanges offering lending services. The Thai regulators have placed investor protection at the forefront of their crypto policy approach. The announcement was made by the country’s Securities and Exchange Commission (SEC), emphasising the need to safeguard investors in the cryptocurrency market.
Similar to Singapore’s rules, Thailand’s ban applies to crypto exchanges offering lending and staking services, specifically targeting “depository services that offer returns to depositors and lenders.” This means that exchanges will be prohibited from providing both lending and staking options. Additionally, the Thai SEC has introduced a mandatory trading risks disclaimer that must be clearly visible to customers, urging them to thoroughly understand the risks involved in cryptocurrency investments.
To ensure users are fully aware of the risks, exchange operators must obtain customers’ acknowledgment before they can utilise the services. Furthermore, investor suitability assessments will be conducted to determine the amount users are entitled to invest in cryptocurrencies.
While Thailand had previously banned crypto payments, it allowed individuals to invest in cryptocurrencies as an asset. The new regulations, effective from July 31, 2023, reinforce the country’s commitment to protect investors and maintain market stability.
The Thai SEC’s decision aligns with the Monetary Authority of Singapore’s (MAS) recent announcement, which also prohibits exchange operators from offering lending and staking services to retail customers. In addition, MAS has mandated that all customer assets be moved into a Trust by the end of the year to prevent the commingling and trading of funds, aiming to avoid potential catastrophes like the FTX incident.
The collapse of the multi-billion-dollar FTX exchange in November last year serves as a cautionary tale for regulators worldwide. The incident exposed significant shortcomings in bookkeeping and revealed that customer funds were sent to FTX’s sister company, Alameda Research, to cover losses from bad trades.
Regulators around the world are now closely examining the FTX incident to inform their regulatory strategies and enhance the oversight of cryptocurrency exchanges. By implementing these new measures, Thailand and Singapore aim to protect investors, maintain market integrity, and mitigate potential risks associated with the cryptocurrency industry.
As Southeast Asia takes a proactive stance toward crypto regulation, it remains to be seen how other countries will respond and whether similar measures will be implemented globally in the future.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
