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Thailand's Crypto Industry Faces Stricter Regulations

Thailand's SEC is requiring providers to establish a "digital wallet management system" to protect users' funds

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Thailand's Securities and Exchange Commission (SEC) has introduced a new set of regulations for digital asset providers in the country.

According to a press release on Tuesday, the SEC announced regulations requiring providers to establish a digital wallet management system to "accommodate efficient custody of digital assets and keys and ensure safety of clients’ assets".

The SEC also said that crypto custodians will have to provide policies and procedures for the "designing, developing and managing" of their digital wallets and keys. Providers will also have to establish a "contingency plan" in case of unforeseen events that may affect the system.

“This includes laying out and testing action procedures, designating responsible persons and reporting the event. 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," the SEC said.

Tightening regulations

Thailand's financial watchdog first announced potential revisions in its stance towards crypto last year, shortly after Singapore and Thailand-based crypto exchange Zipmex paused withdrawals.

“The extreme volatility of digital-asset prices has spurred the urgent need for improved supervision,” Ruenvadee Suwanmongkol, SEC secretary-general, told Bloomberg in July.

“Our main focus will be to provide more protection for small investors, some of whom are putting most of their savings into these assets,” she said.

In September, the SEC announced a ban on crypto companies from offering staking and lending services.

More recently, the SEC is questioning whether Zipmex breached local rules surrounding digital asset funding. In December, the SEC accused Zipmex of "discriminatory actions" and issued an investor warning after the group declared that Zipmex Group and any director, officer or employee have no obligation or responsilibty to customers.

Thailand’s tougher stance on crypto is in line with the cautious stance from some of its South East Asia neighbours. However, Vietnam and the Philippines, which have taken a less stringent approach to crypto have taken the first and second place in the Top 2022 Crypto Adoption Index. Thailand ranked 8th whilst Indonesia ranked 20th.