Thailand prepares ban on crypto betting and lending
Thailand’s Securities and Exchange Commission (SEC) is holding another open hearing to get public opinion on whether to ban the offering of crypto betting and lending services to customers.
According to a press release, the watchdog is cracking down on digital asset escrow services in the wake of the crash of crypto-lending platforms earlier last year. Several regulators have warned in recent weeks that many more DeFi platforms are facing a collapse.
As such, Thailand’s SEC has stepped in to ensure maximum protection for local investors and minimize the public’s risk when interacting with the sector. It explains that these unexplored and unknown technologies put consumers at risk, with the lack of regulation often covering fraud, completely illegitimate valuation claims, and very often speculation, as well as criminality.
The SEC proposes to prohibit crypto business operators from “taking deposits of digital assets and further using these digital assets to borrow and invest to pay the depositors.: It also plans to prohibit advertising or solicitation to “the general public or conducting activities that may support deposit or lending services. Prohibits the digital business operators from accepting digital assets and paying returns to depositors.”
“Under the SEC’s guidelines, digital asset business operators are not permitted to provide or support deposit and lending services in order to prevent possible harm to investors and the public in digital assets in the event of disruptions or financial problems that may occur on a continuous or simultaneous basis among service providers as has recently been the case for foreign counterparties. In addition, the draft regulation is expected to further clarify the scope of supervision of businesses with digital assets because they are not under state supervision,” the statement said.
Before the recent crisis, the use cases presented by major players reflect that lending trends are shifting to a reliance on digital assets to support business operations rather than only betting on short-term price movements. In particular, there was considerable interest from the institutional players in borrowing to facilitate a specific strategy such as for shorting, arbitrage or working capital purposes.
The Southeast Asian nation 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 regulate custody of digital assets held by cryptocurrency operators.
The current rules already require crypto exchanges to share the information of users with regulators, when funds are transferred between firms, to curb a growing number of illegal activities stemming from the global cryptocurrency industry.
Earlier in January, crypto fund managers and investment advisers were also required to apply for a license to continue their business. As things used to be, money managers who traded assets that fell outside the legal definition of securities, futures contracts or similar financial instruments were not subject to SEC oversight. Investors in crypto funds managed by unregulated portfolio managers also did not enjoy the protection of investor compensation funds.
