Thailand's SEC considers ban on staking and lending services by VASPs to protect investors and clarify the regulation of digital assets
The Securities and Exchange Commission (SEC) of Thailand has proposed a ban on staking and lending services offered by Virtual Asset Service Providers (VASPs). This move is aimed at protecting investors from potential risks associated with these services.
Staking involves holding and validating cryptocurrency transactions on a blockchain network, while lending allows users to lend their digital assets to others in exchange for interest. While these services can provide attractive returns, they also come with significant risks, including the potential loss of funds due to market volatility and security breaches.
Thailand's Securities and Exchange Commission (SEC) is considering a ban on staking and lending services by virtual asset service providers (VASPs). The SEC has released a draft regulation to prevent VASPs from deploying users' deposits and offering lending services, which could harm investors in the event of service termination. The regulation also aims to clarify the scope of supervision of digital asset businesses, as they are currently not fully regulated.
The SEC has asked for comments and suggestions from those who stand to benefit from the new regulation, which aims to better safeguard investors, lessen risks and clear up any confusion about whether or not deposit-taking and lending services are under the purview of regulators or not.
The announcement follows a public hearing on the principle of the regulation held in September and October 2022.
The move comes as the SEC of Thailand tightens the country's cryptocurrency rules in response to the crisis in the crypto lending industry. Several major industry lenders, including Voyager Digital, Celsius Network, Genesis Global, Babel Finance, and Hodlnaut, have encountered serious liquidity issues during the ongoing crypto bear market, leading some firms to restructure or liquidate their businesses.
Meanwhile, Gemini, a major crypto exchange founded by Tyler and Cameron Winklevoss, is facing a lawsuit from the US SEC for alleged violations in its "Earn" program, which offered investors up to 8.05% in annual gains.
With the crypto industry facing increased scrutiny from regulators worldwide, the SEC of Thailand's proposed regulation aims to protect investors and provide greater clarity on the regulation of digital asset businesses.
Also, read - Federal Reserve Creates Specialized Team to Monitor Cryptocurrency Industry