Thailand SEC bans crypto exchanges from offering lending services

• Thailand has mandated a trading risk disclaimer that must be clearly visible to the customers.
• Regulators globally are taking such steps to avoid a situation similar to the FTX collapse.

Thailand has announced a ban on crypto exchanges in the country from providing lending services. The Thai regulator – Securities and Exchange Commission (SEC) – made the announcement on 3 July.

The ban applies to all the “depository services that offer returns to depositors and lenders.” Therefore, it expressly restricts crypto exchanges from offering both lending and staking services.

The Thai SEC has also mandated a trading risks disclaimer that must be clearly visible to the customers, which reads:

“Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly, because you may lose your entire investment.”

Before authorizing the use of the service, exchange operators must ensure that consumers understand the risks. Furthermore, exchanges should assess each customer to analyze how much a customer can invest in crypto.

The new rules will come into effect on 31 July, 2023.

Thailand is the second Southeast Asian country to ban crypto lending. Singapore also announced a similar ban on 3 July.

Last year, the Thai regulator prohibited crypto payments, except allowing consumers to invest in it as an asset.

The Singaporean regulator, the Monetary Authority of Singapore (MAS), made an announcement that restricts exchange operators from offering lending and staking services to retail customers. The MAS also now compels exchanges to transfer all customer assets into a Trust before the end of the year.

The step aims to prevent the commingling and trading of customer funds, as well as the potential of another FTX-style disaster. Thailand’s decision regarding crypto lending aims to address the same concern.

The multi-billion dollar FTX exchange collapsed in November 2022. It emerged that FTX transferred customer assets to its sister company, Alameda Research, to patch in its balance sheet after Alameda made some disastrous investments.