Thailand’s SEC Bans Crypto Lending, Demands Risk Warning Disclosure

Thailand’s securities watchdog today (Monday) issued new rules that ban cryptocurrency firms from offering crypto lending services that provide returns to investors for their deposits. The rules also demand that digital asset operators from July 31, 2023, start warning their customers against the risks of cryptocurrency trading.

Thailand Focuses on Investor Protection

According to the Securities and Exchange Commission (SEC), crypto exchange operators must display this message (translated from Thai to English): “Cryptocurrencies carry a high level of risk. Please study and understand the risks of cryptocurrencies thoroughly. You may lose the entire amount of your investment."

These rules also mandate crypto business operators to ensure that their customers consent to acknowledge the risks involved in cryptocurrency trading. In addition, crypto firms will assess their customers for investment suitability and prescribe ‘appropriate investment proportions’. The watchdog said the rules are targeted at boosting “investor protection against the risks of such services.”

The SEC’s new rules on crypto lending services and warning disclosure follow resolutions made on the issues in December and September 2022, respectively. In May this year, the markets supervisor further revised the resolution on risk warning disclosure.

More Crypto Rules in Thailand

With the new rules, Thailand’s securities regulator continues its strict oversight of the local cryptocurrency industry. In September last year, the financial markets supervisor introduced strict rules on crypto promotion and advertising. It mandated crypto companies to display investment risks, provide a balanced view between risks and returns, and submit information on their advertisements projects.

In early 2022, the watchdog also announced a ban on crypto as a means of payment, which was effective from April. However, it permitted Thai citizens to invest and trade digital assets.

Recently, authorities in Thailand proposed enforcing a 15% capital gain tax on crypto traders and miners, exempting exchanges. However, the government jettisoned the plan after facing strong opposition against the move. The SEC is also considering lifting its restriction on retail investment in initial coin offerings.

Moreover, in 2021, the SEC shelved its proposed plan to impose a minimum annual income of 1 million baht (around $33,000 at the time) on crypto investors. However, it mandated physical ID checks of crypto investors and license registration for crypto fund managers.

Despite the strict regulatory environment, Thailand citizens continue to flock massively to the cryptocurrency industry. According to Chainalysis, the Southeast Asian country ranked 8th in terms of global crypto adoption in 2022.

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