Thai regulator wants to cushion digital currency investors against losses

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Thailand’s securities watchdog is seeking to cushion digital currency investors against huge losses caused by a lack of knowledge of the market. The country’s Securities and Exchange Commission (SEC) is set to conduct a public hearing this month to determine what qualifications traders need before getting into the digital currency industry.

The Thai digital currency market has been growing at a rapid rate in recent months. New investors are at an all-time high, attracting the interest of the regulator. SEC Secretary General Ruenvadee Suwanmongkol said recently that she believes the watchdog must step in to protect investors.

As local paper Bangkok Post reports, the regulator believes that these qualifications will ensure traders have “sufficient financial buffers to absorb risk from volatile price swings.”

Suwanmongkol revealed that the SEC’s interest comes after the Thai market exploded in the past few months. In addition, the Thai Finance Minister Arkhom Termpittayapaisith directed the regulator to protect investors getting into the industry.

In December 2020, the net buying of digital assets doubled to THB1.1 billion (US$37 million) from THB500 million (US$16.7 million) in November. In January it rose slightly to hit THB1.2 billion (US$40 million). As the paper reports, in the first eight days of February, this figure had already hit THB400 million (US$13.36 million). From Jan 1 to February 8, the total trading volume in the Thai market was at THB130 billion (US$4.3 billion).

The SEC also said that the number of new accounts rose by 124,000 within the first eight days of the month. There are now 594,000 active traders in the Thai digital currency market.

Ruenvadee stated, “Cryptocurrencies have high risks for investors. We should set some screening criteria such as age, trading experience and level of revenue or wealth to limit risks. These limits already exist for high-yield bonds, which are only available to some types of investors.”

She believes that traders must have sufficient knowledge before delving into digital currencies. Aside from being well-informed, she believes they should also be well-off enough to offset any losses they incur from digital currencies.

The Thai market stakeholders opposed the regulator’s view which would put digital currencies beyond the reach of low-income citizens. As Suppakrit Boonsat stated, the regulator should stick to eliminating foul play in the market. Boonsat, who is the head of the Thai Digital Asset Association, believes that traders should have the option of learning through experience.

In a separate action, the SEC issued new regulations for digital currency asset managers effective February 24. They will require such managers to obtain a license before practicing in the Thai market.

“Although they may have been operating before the businesses are regulated under the Ministry of Finance’s Nov 27, 2020 regulation, all digital asset fund managers or advisers aiming to continue their businesses must submit applications to the SEC by the deadline,” the watchdog stated.

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