The SEC of Thailand is working to better protect cryptocurrency investors by introducing new rules for crypto Custody services.
In order to ensure effective custody, the Thai SEC enacted regulations on January 17 mandating virtual asset service providers (VASP) to put up a digital wallet management system. The new regulations are directed towards VASPS or crypto custodians that offer services for crypto storage.
Three essential needs are included in the legislation, including the implementation of a strategy and set of rules for regulating how digital wallets and private keys are managed in terms of risk. According to the regulations, VASPS must inform authorities about such policies and present action plans to guarantee compliance.
The SEC also asked cryptocurrency custodians to provide policies and processes for creating, maintaining, and administering digital wallets and keys. The government will also demand that cryptocurrency custodians have a backup plan in the event that something unexpected happens that may compromise the wallet management system.
“This includes laying out and testing action procedures, designating responsible persons and reporting the event,” the SEC stated, adding: “An audit of system security is also required as well as digital forensic investigation in case of any event affecting the security of systems related to digital asset Custody, which could cause significant impacts on clients assets.”
According to the announcement, the new regulations have taken effect starting from Jan. 16, 2023. Crypto custodians are required to fully comply within six months from the effective date.
SEC of Thailand Gearing Towards Stricter Crypto Regulation and Adoption
Following industry failures like the FTX crash, Thailand’s SEC has announced new crypto restrictions that are in line with its objectives to enact stricter crypto legislation. According to reports, the authorities opened a fresh inquiry in early January into a local cryptocurrency exchange named Zipmex on the grounds that it was providing digital asset fund management services without permission.
The Bank of Thailand has also revealed its intentions to let virtual banks start operating in the nation. According to the report, programs that allow virtual banks to perform the functions of financial service providers will be released later in 2023. The current action aims to increase competition and accelerate Thailand’s economic expansion.
Under the license framework, virtual banks are regulated and overseen in the same way as traditional commercial banks. In addition, qualified applicants must meet certain requirements.