Thailand SEC decides to ban crypto companies that offer betting and lending services

Thailand’s Securities and Exchange Commission (SEC) recently decided to ban crypto companies from offering betting and lending services. The primary reason behind this was to protect traders from the potential risks associated with crypto lenders.

Many prominent crypto lenders have also had liquidity problems recently due to the market downturn. The decision to ban the “custodial services” includes the payment of returns to depositors, and it was created to primarily protect traders from the risks that have been associated with cryptolenders.

Crypto lenders such as Celsius Network and Babel Finance, those that offered lending services, froze their withdrawals in recent months due to the industry-wide slowdown.

Market movers like Bitcoin and Ethereum have lost more than 50% of their market capitalization since the beginning of 2022. Zipmex is also one of the beleaguered exchanges that have stopped withdrawals. The exchange has units in Singapore, Thailand, Australia and Indonesia.

The move comes after crypto exchanges faced bankruptcy

Liquidity issues have been a concern for crypto exchanges this year, specifically given that the industry has found itself in a difficult situation.

Exchanges have reported serious liquidity concerns in 2022. Some lenders had planned to give higher interest rates to depositors, and they in turn also faced bankruptcy when the market crashed.

The Thai SEC had suggested that

Prohibit crypto business operators from taking deposits of digital assets and further using these digital assets to borrow and invest to pay the depositors. Prohibits advertising or solicitation to the general public or carrying out activities that may support deposit or lending services. Prohibits digital business operators from accepting digital assets and paying returns to depositors.

The Thai SEC has also conducted an investigation regarding the losses faced by the public. It has taken feedback on the impact caused by Zipmex through an online forum.

The withdrawal of Zipmex has now resumed for customers in Thailand, but this has not taken the exchange off the SEC’s radar.

Zipmex’s current situation

The Thai SEC became involved due to the liquidity problems faced by the exchange, Zipmex, which started in July 2022.

At that time, Zipmex had a strong presence in Southeast Asian countries. It had just stopped deposits and withdrawals on the platform.

Currently, Zipmex has assured that it has worked closely with the SEC and is fully compliant with the necessary standards and safeguards.

The SEC has also decided to implement strict advertising rules for crypto firms that have been operating in the country since October 1.

The companies will have to cut down on advertising by directly promoting crypto to the “official channels” as well as their own websites and will be required to provide details of ads and expenses.

This includes the role of social media influencers and bloggers, as well as their terms with the SEC.