Thailand’s Securities and Exchange Commission (SEC) on Wednesday launched a public consultation on its proposed amendments to regulations for the custody of crypto holdings in digital asset businesses.

Fast facts

  • The additional regulations — which the SEC said are intended to enhance investor protection — include requiring digital asset businesses to comply with “the principles for decentralized approval authority, multi-sign approval authority, and check and balance” for the withdrawal and transfer of fiat money; prohibiting the use of a client’s assets for the benefit of another client, and reconciling clients’ assets every business day to ensure accurate and updated records.
  • The SEC’s proposal prohibits “seeking benefits from clients’ fiat money,” except in the form of deposit with a commercial bank. The proposed regulations also specifically forbid yield generation in the form of digital asset lending to other persons.
  • “The SEC’s policy is to strengthen the oversight of digital asset business operators with a focus on continued quality development and investor protection reliability of such business operators,” the SEC said in a statement. “This means the records of investors’ assets under custody of the business operators must be accurate, complete and updated while the assets must be properly protected from relevant risks.”
  • The SEC’s public consultation, available on an online form, closes on Sept. 22.
  • Digital asset businesses will have one month from the effective date of the new regulations to comply.
  • Thailand has been actively exploring a retail and wholesale central bank digital currency (CBDC) and embraced blockchain adoption in the financial sector. But amid the rise of cryptocurrencies in the country — Thailand is ranked 12th according to blockchain data provider Chainalysis’ 2021 Global Crypto Adoption Index — the country has taken a more nuanced stance towards crypto, with the Bank of Thailand warning that it does not support the use of cryptocurrencies like Bitcoin as a means of payment. Thailand’s Securities and Exchange Commission has also banned cryptocurrency exchanges in the country from providing services related to meme tokens such as Dogecoin, fan tokens and non-fungible tokens (NFTs).