Publicly warned about the dangers of crypto mining

The Securities and Exchange Commission (SEC) has warned investors to exercise care and caution before investing in cryptocurrency mining due to several risks and the lack of oversight by Thai regulators.

A current advertisement online and on outdoor billboards invites the public to invest in cryptocurrency mining.

According to the SEC statement, the ad encourages the public to invest by purchasing or leasing equipment, or investing in the processing power of such equipment, saying that such investment will yield high returns.

The regulator said investing in cryptocurrency mining involves a number of risks that must be carefully considered, including the volatility of cryptocurrency prices, risk of competitive market conditions, equipment deterioration and rising electricity costs.

There could be a security risk to investors’ personal data and property, as well as possible fraud that does not involve an actual investment, the SEC said.

Additionally, the cryptocurrency mining business is not overseen under the Digital Asset Business Act of 2018 by any regulator.

If an operator wants to issue digital tokens or offer trading services, it must obtain a business license. Failure to do so will result in penalties as prescribed by law.

“The SEC and related agencies are in the process of reviewing regulatory guidelines for digital assets to provide appropriate investor protection,” the SEC said in the statement.

Cryptocurrency mining is defined as a miner using a device to run a mining computer program, receiving cryptocurrency as a reward when conditions set by the program are met.

In a related matter, the SEC is improving the criteria for operators’ capital of digital assets and holding a public hearing on the subject from November 10 to December 12.

The new criteria will be put into use immediately for new traders, while existing ones will have a one-year grace period to meet the new requirements.

The new rules require a digital asset exchange operator to raise its paid-up capital to 100 million baht from the current level of 50 million baht, while a digital asset broker must raise its paid-up capital to 50 million baht from the current level of 25 million. A digital asset dealer must raise its paid-up capital to 50 million baht from the current level of 5 million.

The Kasikorn Research Center reported in late October that the global cryptocurrency market had been highly volatile and in a downward trend since early this year, facing several crises of confidence.

The collapse of certain cryptocurrencies and stablecoins as well as the bankruptcies of some cryptocurrency lending platforms affected market confidence.

The rise in interest rates around the world is also a main reason for the sale of risky assets such as cryptocurrencies, the think tank said.

As of November 9, 2022, the total cryptocurrency market cap on coingecko.com was around $950 billion, down more than 50% since the start of the year.