Amid heightened global scrutiny over cryptocurrency exchanges, Thailand joins Singapore among Southeast Asian countries in banning retail stake and lending services.
The Securities and Exchange Commission of Thailand Announced a ban preventing cryptocurrency exchanges from offering lending and staking services to retail clients on July 3.
The news came hours after the Monetary Authority of Singapore (MAS) revealed new measures to protect investors.
MAS had announced a ban, prohibiting cryptocurrency exchanges in Singapore from offering lending and staking services for retail clients.
Like Singapore, the Thai regulator’s move demonstrates that it puts investor protection first.
Unlike retail investors, however, the ban does not prohibit cryptocurrency exchanges from placing bets and lending cryptocurrency to institutional clients.
In its exact words, the announcement stated that the ban applies to all “deposit services that offer returns to depositors and lenders.”
In addition, the Thai SEC introduced a mandatory trading risk disclaimer. Cryptocurrency exchanges must make trading risk disclosures visible to clients in clear and comprehensive language.
“Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly because you may lose your entire investment,” the disclaimer reads.
In addition, cryptocurrency exchange operators must ensure that clients recognize the potential risks of trading cryptocurrencies before consenting to use the services.
In addition, they must conduct investor suitability assessments to determine how much users can invest in crypto.
The Thai regulator first forbidden crypto as a payment method in March 2022, starting April 1, 2022.
The regulator cited concerns about the potential risks of financial instability that cryptocurrencies could pose to the country’s economy.
He also highlighted the risk of value loss due to high price volatility, cyber theft, and personal data leakage as reasons to ban crypto payments.
Additionally, the Thai SEC said that cryptocurrencies could aid money laundering.
Thai SEC move follows that of Monetary Authority of Singapore (MAS) advertisement July 3
MAS prohibited exchange operators from offering lending and participation services to retail clients.
The financial regulator ordered crypto exchanges to transfer all client assets to a trust before the end of 2023.
The move is aimed at preventing crypto exchanges from commingling customer funds and mitigating the risk of FTX-like chaos.
In the fourth quarter of 2022, FTX collapsed along with billions of dollars in client assets after a landslide by investors exposed a balance sheet deficit.
Other revelations showed the exchange mixed customer funds with its sister company, Alameda Research, which had holes in its balance sheet.
The FTX fiasco affected the cryptocurrency market, escalating an existing bear market, with asset prices falling deeper.
The ripple effect caused many cryptocurrency-focused companies to file for bankruptcy and sparked regulatory scrutiny over permanent companies.
Regulators around the world have used the FTX catastrophe as a case study to offer new measures to protect investors from loss of funds.