Thailand security regulator issues new guidelines for virtual currency wallet providers

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Thailand’s Securities and Exchange Commission (SEC) has introduced a new regime of rules to guide the internal activities of virtual asset service providers (VASPs).

The SEC announced the new regulations this week, urging digital asset firms that offer custody services to establish a “digital wallet management system.” The securities watchdog argued that the rationale for the new rule is designed to “ensure the safety of clients’ assets.”

Under the latest directives, VASPs are expected to have three major requirements, including guidelines for risk management and controls to ensure adherence to the new policy. Firms are expected to create a framework for securely storing wallet keys and develop a contingency plan in the event of an anomaly in the management system.

“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,” read the SEC’s statement.

Thailand’s SEC notes that the regulations started on Monday, with virtual currency firms offering custody services expected to comply within a six-month time frame.

Since the multiple implosions rocked the scene, the regulator has been on the vanguard in sanitizing Thailand’s digital asset system. The collapse of FTX, Terra, Celsius, and Three Arrows Capital (3AC) cost Thai investors billions of dollars.

Last week, the SEC announced that it was investigating local digital asset exchange Zipmex for allegedly offering digital asset fund management services without permission from the regulator. Before the probe, the regulator had placed a nationwide ban on virtual currency lending and reined the advertising procedures on digital asset advertisements.

Tightening the regulatory screw is mirroring global standards

Thailand’s plan to closely control the virtual currency industry is coming on the heels of a concerted push by regulatory agencies worldwide to police the sector. Security watchdogs in the United States, Australia, the Philippines, and Canada are pledging to double their efforts at regulating the industry in light of recent collapses.

However, Indian and Japanese regulators believe that the efforts could be futile unless there is a collaboration between policymakers because of the inherent dangers of regulatory arbitrage. To encourage a collaborative effort, India confirmed that it would use its tenure as G20 President to create an international framework for regulating digital assets.

Watch: The Future of Digital Asset Exchanges & Investment