Despite the positive beginnings, Thailand is once again showing its willingness to curb the adoption and use of cryptocurrencies in its territory. The local Securities and Exchange Commission (SEC) suggests banning companies from offering staking and lending services. While this is only a recommendation for now, it could turn into a more general ban in the future.
However, the Thai government had already started its way in the sector. The many professionals and investors who have settled there in the hope that it will continue along this path are a testament to this. Unfortunately, we have to admit that policymakers are taking a completely different turn in this year of 2022: after introducing a new, stricter tax framework, they banned payments in cryptocurrencies for the purchase of goods and services. In addition, they explained that they wanted to give the country’s Central Bank more powers with the aim of supervising professionals carefully. In other words, their goal is to completely overhaul the current regulations on cryptocurrencies (deemed too risky) with the aim of making them less flexible, and therefore less favorable.
In this general climate, the SEC is making yet another proposal against the development of the crypto industry.
The SEC does not want staking and lending in Thailand anymore
Indeed, the regulator suggests banning companies from carrying out all activities related to lending and staking of cryptocurrencies. According to him, this proposal would enhance investor protection and “reduce the associated risks.”
What would happen? As a result, and in addition to not being able to offer this type of service, local businesses would no longer be able to “accept deposits in crypto assets by customers, nor lend, invest, bet or employ these crypto assets.” The same goes for paying customers regular (or other) interest. Here, the SEC considers that this would amount to a ban on providing “support to third parties that undertake cryptocurrency savings and lending services, including marketing.”
This suggestion is arguably a knee-jerk reaction by the SEC after it witnessed the collapse of many companies – due to the bear market and other recent events such as the fall of the Terra ecosystem or the 3AC investment fund. Unfortunately for the crypto ecosystem, it cannot be denied that all of these phenomena have created a great deal of distrust from the authorities in many states. And in addition to the distrust that they are now showing, it is also an opportunity for them to question the benefits of this sector since they have new arguments to show that it is a “too” risky field.
The SEC makes a second proposal
The regulator has taken the opportunity to make a second proposal, again aimed at the industry’s professionals. It aims to require them to “disclose risk information to users before admitting them to their platforms.” In addition, they will also have to require a minimum purchase of 5,000 baht (about $135). This last proposal is quite surprising, and it’s hard to understand its appeal.
For the moment, the ideas of the SEC are only proposals, without any binding value. It is also seeking public comment on them. This consultation will end on October 17. We should therefore know more by that date.