Thailand bans crypto lending and staking services

abdelaziz Fathi

Thailand’s Securities and Exchange Commission (SEC) has banned crypto exchanges in the country from providing lending services as it prioritizes investor protection. The new rules will come into effect on 31 July, 2023.

The outright ban specifically applies to “depository services that offer returns to depositors and lenders,” effectively prohibiting crypto exchanges from offering lending and staking services. Thailand is the latest country to announce such a ban, joining Singapore in implementing measures to restrict certain DeFi products.

“It is forbidden to advertise or persuade the general public or do any other act in the manner of supporting the deposit taking & lending service,” the Thai SEC wrote in a news release. It explains that these unexplored and uncharted technologies put consumers at risk, where the lack of regulation often covers fraud, completely illegitimate claims about valuation, and very often speculation, as well as criminal dealings.

In addition to the ban, the Thai SEC has mandated a trading risks disclaimer that must be prominently displayed to retail customers to keep them aware of the potential risks associated with engaging in cryptocurrency trading. It reads: “Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly, because you may lose your entire investment.”

As part of the new regulations, exchange operators in Thailand are required to ensure that users acknowledge the risks associated with crypto trading before they can use their services. Furthermore, the SEC has introduced a mandatory investor suitability assessment to determine the appropriate trading limits for users. These assessments will take into consideration factors such as the financial capability and risk tolerance of individuals.

Per recent regulations, a retail investor may only invest up to THB 300,000 ($8,800) in a particular digital token offering. Thai securities regulator indicated its willingness to soften the current restriction to fuel investments in real estate and infrastructure backed ICOs.

The SEC opened an open hearing to get public opinion about its plan to remove the investment limit and allow individuals to buy more of the ICOs, noting that the new set of rules would increase investors’ risk exposure.

Additionally, the SEC is preparing to require digital asset operators apply for permission from the regulator to expand to other businesses, with additional costs for compliance with the new regulations to apply.

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