According to a press release, the watchdog is cracking down on digital asset depository services in the aftermath of crypto lending platforms’ crashes experienced earlier last year. Several regulators have warned in recent weeks that many more DeFi platforms are on the verge of facing a collapse.
As such, Thailand’s SEC has stepped in to ensure maximum protection for local investors and minimize the general public’s risks when interacting with the sector. 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.
The SEC proposes to prohibit crypto business operators from “taking deposits of digital assets and further using those digital assets to borrow and invest to pay the depositors.: It also plans to ban advertising or soliciting “the general public or conducting any activities that would support deposit-taking or lending services. Prohibiting the digital business operators from accepting digital assets and paying returns to the depositors.”
“Under the SEC’s policy, digital asset business operators are not allowed to provide or support deposit taking and lending services to prevent possible damage to digital asset investors and the public in the possible event of service discontinuance or financial problems that may occur on a continuous or concurrent basis among service providers as has recently been the case for foreign counterparts. In addition, the draft regulation is expected to further clarify the scope of supervision of digital asset businesses because they are not under state oversight,” the statement reads.
Before the recent crisis, the use cases presented by major players reflect that the lending trends are shifting to a reliance on digital assets to support business’ operations rather than for only betting on the short-term price moves. Specifically, there was substantial interest from the institutional players to borrow to facilitate a specific strategy such as for shorting, arbitrage, or working capital purposes.
The Southeast Asian nation has recently published a series of new regulations for crypto businesses, some of which were restrictions that have sparked public outrage. Most recently, it has proposed new guidelines that would govern custody of digital assets held by cryptocurrency operators.
The current rules already require crypto exchanges to share the information of users with regulators, whenever funds are transferred between firms, to curtain a growing number of illicit activities stemming under the guise of the global cryptocurrency industry.
Earlier in January, crypto fund managers and investment advisers were also required to apply for a license to continue their businesses. As things stood before, money managers trading assets that fell outside the legal definition of securities, futures contracts or equivalent financial instruments were not subject to SEC supervision. Investors in crypto funds managed by unregulated portfolio managers also did not enjoy the protection of investor compensation funds.
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