As published on: decrypt.co, Tuesday 4 July, 2023.
Thailand is the second Southeast Asian country to announce a ban on crypto exchanges offering lending services today, as the country’s regulators put investor protection at the forefront of their crypto strategy.
Earlier, news broke that Singapore is banning exchanges from offering lending and staking services to retail customers.
Thailand’s similar rules were announced in a release today by the country’s Securities and Exchange Commission (SEC).
The wording of the announcement makes clear that the ban applies to “depository services that offer returns to depositors and lenders,” thus outright banning exchanges from offering both lending and staking services.
The Thai SEC has also introduced a mandatory trading risks disclaimer which must clearly be visible to customers. It reads: “Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly, because you may lose your entire investment.”
Exchange operators must ensure users acknowledge the risks before consenting to use the service. In addition, investor suitability assessments will determine how much users are entitled to invest in crypto.
The regulator last year banned crypto payments, but left the door open for consumers to invest in it as an asset.
The new rules will come into effect on July 31, 2023.
Today’s news from the Thai SEC mirrors an announcement made earlier today by the Monetary Authority of Singapore (MAS) that exchange operators are hereby prohibited from offering lending and staking services to retail clientele.
The MAS also now requires exchanges to move all customer assets into a Trust before the end of the year. This measure is to avoid the commingling and trading of customer funds and prevent the risk of another catastrophe like FTX.
Last November, the multi-billion dollar FTX exchange suffered a historic collapse after a bank run on its native FTT token exposed some bad bookkeeping.
Revelations soon followed that FTX sent customer funds to its sister company, the hedge fund Alameda Research, to fill holes in its balance sheet after the latter made some bad trades.
Although the dust has settled, regulators across the world are referring to the FTX incident as a case study of what to look out for when regulating the activities of exchanges.