The Securities and Exchange Commission of Thailand bans cryptocurrency storage and lending services

The Securities and Exchange Commission of Thailand bans cryptocurrency storage and lending services

The Securities and Exchange Commission (SEC) in Thailand is preparing to ban cryptocurrency exchanges from providing storage and lending services to clients.

According to a press release, the watchdog is cracking down on digital asset deposit services in the wake of the crypto-lending platform outage that occurred earlier this year. Several regulators have warned in recent weeks that many DeFi platforms are on the cusp of a meltdown.

As such, the Securities and Exchange Commission of Thailand stepped in to ensure maximum protection for local investors and reduced risk for the general public when interacting with the sector. He explains that these unexplored and anonymous technologies put consumers at risk, as lack of regulation often covers fraud, wholly wrongful claims about valuation and often speculation, as well as criminal transactions.

The Securities and Exchange Commission is proposing to ban crypto-operators from “taking deposits of digital assets and using these digital assets to borrow and invest to pay depositors: it also plans to prohibit advertising or solicitation” to the general public or any activities that would support deposit-taking or lending services. Preventing digital business operators from accepting digital assets and paying depositors returns.”

Prior to the recent crisis, the use cases presented by major players reflected that lending trends were shifting to relying on digital assets to support business operations rather than betting only on short-term price movements. Specifically, there has been significant interest from institutional players in borrowing in order to facilitate a specific strategy such as short selling, arbitrage or working capital purposes.

The Southeast Asian country recently published a series of new regulations for crypto companies, some of which were restrictions that sparked public outrage. Recently, it proposed new guidelines that would govern the custody of digital assets held by cryptocurrency operators.

Existing rules already require cryptocurrency exchanges to share user information with regulators, whenever funds are transferred between businesses, to shut down a growing number of illegal activities emerging under the guise of the global cryptocurrency industry.

Earlier in 2021, crypto fund managers and investment advisors were also required to apply for a license to continue their business. As before, money managers who trade assets that fall outside the legal definition of securities, futures or similar financial instruments are not subject to SEC oversight. Investors in crypto funds managed by unregulated portfolio managers also did not have the protection of investor compensation funds.

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