After the crashes of the crypto lending platforms that occurred in the summer of 2022, the Securities and Exchange Commission (SEC) of Thailand is planning to implement extreme measures. Thailand’s SEC intends to prevent cryptocurrency platforms from offering or supporting services for digital asset depository.
According to the press release, the decision to prohibit “depository services,” which include providing returns to depositors, was meant to shield traders from the dangers connected with crypto lenders.
The proposed prohibition covers a number of key topics. It will make it illegal for operators to accept deposits of digital assets with the promise to repay funds to depositors—even if those funds originate from marketing budgets rather than the assets’ rising worth. Additionally, advertising for depositary and loan services would be prohibited.
Following a downturn in the cryptocurrency market, where bitcoin and ethereum have lost more than 50% of their value since the beginning of the year, several crypto lenders, including Celsius Network and Babel Finance, as well as exchanges offering lending services, have frozen withdrawals over the past few months.
A Bad Year for Crypto Lending Platforms
Due to the broader market collapse last summer, crypto lending platforms have found themselves in significant problems. Companies like Celsius Network and Voyager Digital first suspended their withdrawals before declaring bankruptcy.
Zipmex, a cryptocurrency exchange that froze withdrawals in July claiming a “combination of factors beyond [its] control,” provided Thailand with its own example. The SEC reported the issue to the police in September after accusing the crypto exchange and its co-founder Akalarp Yimwilai of breaking local regulations. According to the authority, Zipmex did not comply with the country’s Digital Assets Act by providing information on digital wallets and cryptocurrency transactions.
Starting in October, Thailand’s SEC will also impose strict advertising regulations on cryptocurrency companies doing business in the nation. Companies will be obliged to confine cryptocurrency-related advertising to “official channels” like their own websites and to provide the SEC with information on all advertisements and spending, including the use of social media influencers and bloggers and their conditions.