The Securities and Exchange Commission (SEC) of Thailand is ensuring better protection of cryptocurrency investors by introducing new regulations for crypto custody services.
On January 17, the Thai SEC issued new regulations mandating that virtual asset service providers (VASPs) establish a digital wallet management system to ensure efficient custody. The new regulation targets crypto custodians or VASPs that provide crypto storage services.
These regulations highlight three major requirements, including the policies and guidelines for monitoring the risk management of digital wallets and private keys. The authority will also require crypto custodians to establish a contingency plan in case of unforeseen events that may affect the wallet management system.
The regulator said, “this includes laying out and testing action procedures, designating responsible persons, and reporting the event.” Further, the SEC also counted on this move to enhance client safety and security. It said:
“An audit of system security is also required as well as digital forensic investigation in case of any event affecting the security of systems related to digital asset custody, which could cause significant impacts on clients’ assets.”
As per the announcement, the new regulations have been implemented from January 16, 2023, and crypto custodians must comply completely within six months from the date of implementation.
The latest crypto guidelines by the regulator in Thailand unify with the authority’s plans to adopt more strict crypto regulations in the nation in the wake of significant industry failures last year, like the collapse of FTX. Todayq News reported in December The Thai SEC claimed that the incidents that occurred last year demonstrated the industry’s vulnerability and a lack of adequate monitoring. The Fintech Department of the SEC believes regulators should be more involved in boosting investor protection systems.
Examples include distributed ledger technology (DLT), a digital system for recording the transaction of assets and their details in multiple locations simultaneously. The regulator established a working committee made up of members from existing government agencies and the private sector to investigate and make suggestions for ways to modify the rules to accommodate the evolving environment and rising dangers associated with digital assets. The application of DLT in the commercial sphere is one of the recommendations.
In early January, the regulator also started a new investigation against a local crypto exchange Zipmex, alleging the firm has been providing digital asset fund management services without permission.