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Thai SEC plots ban on digital currency deposit and lending services

Thailand’s Securities and Exchange Commission (SEC) is mulling a potential ban on digital asset firms from providing depository services. The news comes after a meeting by the SEC with industry participants over the implosion faced by firms during the summer.

The ban has been approved in principle, and a comprehensive regulation will be issued after a public consultation. Members of the public are encouraged to send their opinions to the SEC, with the window for suggestions open until October 17.

Details of the ban include the prohibition of “digital asset business operators” from taking deposits of digital assets with a promise of returns, even if the returns do not stem from an increase in the assets. The incoming ban will also be extended to any staking or lending services from operators to protect investors.

The SEC appears motivated by the widespread reports of digital asset firms halting deposits and withdrawals for their customers. CelsiusVauld, and Babel Finance are examples of firms that went through turbulent phases due to “unfavorable market conditions.”

Many of these troubled firms have left investors with little to no option after heading to courts to secure a moratorium against lawsuits from disgruntled creditors. Others have filed for bankruptcy and are taking preemptive steps to secure their assets from the reach of the courts in certain jurisdictions.

Affected investors may have to wait up to six months to even a couple of years to recover their assets from these digital asset companies. Thailand bore a portion of the brunt of failing digital asset companies after local firm Zipmex announced that it was halting withdrawals for its customers.

Given that the news hit close to home, Thailand’s SEC swung into action with the proposed ban extending to even advertisements. 

“Prohibit advertising or soliciting the general public or doing any other act in the manner of supporting the deposit taking and lending service,” read the report on its official website.

Just another day in Thailand’s digital asset ecosystem

Thailand’s recent decision to ban lending, staking, and other depository services is one in a long line of stiff regulations to limit the activities of industry operators. Security agencies are sniffing around service providers, with Bitkub’s top executives being investigated for insider trading, while Zipmex is staring at a legal case with the police for failing to forward pertinent details over its halting of withdrawals to the SEC.

Nares Laopannarai, Secretary-General of the Thai Digital Asset Association, told Bloomberg that industry participants “are extremely deflated with negative headlines almost every day.”

Since the year began, active virtual currency trading accounts have fallen by 246,000 from a high of nearly 800,000.

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