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Thai SEC Issues New Rules for Crypto Custodians

source-logo  cryptodaily.co.uk 19 January 2023 08:53, UTC

The Securities and Exchange Commission (SEC) of Thailand has issued a set of regulations for companies offering crypto custody services.

Thailand’s SEC announced a new set of rules for crypto custody providers, which took effect on January 16, 2023. The SEC detailed that businesses that offer crypto custody services for clients’ digital assets are now required to “establish a digital wallet management system to accommodate efficient custody of digital assets and keys and ensure the safety of clients’ assets.”

Thai SEC Issues Three Major Rules for Crypto Custody Providers

The SEC’s newly issued set of regulations includes three major requirements. The first includes the provision of policy guidelines for overseeing the risk management of digital wallets and private keys. The SEC says “Key means a cryptographic key or any other data that must be kept confidential in order to be used for approval of transfers or transactions related to digital assets in digital wallets.” This regulation also requires custody service providers to communicate and “clarify such policy, action plans and procedures, work supervision and internal control to ensure compliance with the policy.”

The second requirement relates to policy and procedures for managing digital wallets. The regulation requires that custodians must create:

Policy and procedures for designing, developing and managing digital wallets as well as creating, maintaining and accessing keys or other related information appropriately, securely and safely.

The final regulation involves a company’s contingency plan should an event take place that could possibly affect the company’s management system of wallets and keys. The SEC stipulates:

This includes laying out and testing action procedures, designating responsible persons and reporting the event. 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.

Thailand Doubles Down on Crypto Regulation

The SEC’s new regulations for crypto custody service providers do not come as a surprise. In December, the SEC announced that it is preparing to implement stricter regulations for digital assets. The regulatory body said that it has been forced to consider stricter regulations given the various collapses and bankruptcies that have taken place in the crypto sector during the year, specifically referring to the fact that investors suffered heavy losses due to the likes of Celsius, Three Arrows Capital, BlockFi, Voyager Digital, and most recently FTX.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.