In a recent revelation, Thailand’s Securities and Exchange Commission (SEC) is preparing to organize a new public hearing to discuss a potential ban on staking and lending services in the country.
According to an official announcement from the regulator, it is seeking public comments on a draft regulation that intends to prohibit virtual asset service providers (VASPs) from delivering or getting involved in any type of crypto staking and lending transactions.
As per the SEC’s policies, the providers should not be allowed to exploit users’ funds in any case. The regulator strictly warns these VASPs to not deploy users’ deposits and provide lending services to prevent possible damage to investors in the case of services’ termination.
Additionally, the draft regulation is expected to further clarify the scope of supervision of digital asset businesses because they are currently not fully supervised. The SEC stated that it aims to ensure the protection and safety of investors via the proposed regulation. Quoting the SEC below:
The proposed regulation aims to provide greater protection to investors, reduce associated risks, and prevent a misunderstanding that deposit taking and lending services are under the same supervision as regulated digital asset businesses.
In the announcement, the SEC mentioned that it conducted a public hearing on the principle of the proposed regulation in September and October last year. The draft regulation would essentially prohibit VASPs from accepting user deposits for lending, staking, and any further deployment of such assets, offering interest payouts on crypto holdings and advertising such services.
The authority has invited stakeholders and interested parties to submit their feedback and suggestions via the SEC’s website or email by April 7, 2023. The news comes amid the SEC of Thailand beefing up the country’s cryptocurrency rules in response to the ongoing crisis in the crypto lending industry.
Notably, Thailand’s SEC has been particularly strict in its approach to crypto regulation and has also prioritized investors’ protection at the top of the table. Todayq News reported in December that the securities regulator was preparing to impose a strict set of regulations on the crypto sector, especially following the FTX crisis that occurred last year.
It had also explicitly warned crypto advertisers to adhere to a code of conduct. It stated that advertising contains material that could deceive investors and raise the dangers of their investments. To attract investors, some digital asset service providers spent money on advertising by recruiting celebrities, all while failing to disclose the information that is needed by law.
Not just that, on January 17, the securities regulator issued new regulations mandating VASPs to establish a digital wallet management system to ensure efficient custody.
These regulations highlighted three major requirements, including the policies and guidelines for monitoring the risk management of digital wallets and private keys. The authority also required crypto custodians to establish a contingency plan in case of unforeseen events that may affect the wallet management system.