Thai Regulators Make Moves to Tighten Crypto Rules

Thailand's Regulators have introduced tighter digital asset rules due to trading irregularities and the fall of a top acquisition involving a crypto exchange.

This move has affected Thailand's mission to become the top digital assets trading centre in Southeast Asia.

Cryptocurrencies in Thailand gained heightened popularity after the country became the first in the region to implement digital-asset legislation in 2018. Following this, the country's Securities and Exchange Commission licensed six platforms as exchanges, including Bitkub Capital Group Holdings Co. and Zipmex Thailand. 

However, the trust in the local crypto market has been under scrutiny following a recent case of insider trading by a Bitkub executive, who was later fined 8.5 million baht ($233,459) by the SEC, and a police complaint earlier this week against Zipmex and its chief executive officer also added to the doubt towards cryptos.

Thailand's local cryptocurrency instability has been compounded by the global crypto rout.

According to Bloomberg, "the stricter oversight, experts said, has compounded the blows from beyond Thailand: the plunge in Bitcoin, Ether and other tokens, as well as meltdowns of crypto lender Celsius Network Ltd., broker Voyager Digital Ltd. and hedge fund Three Arrows Capital."

The SEC is planning to enhance the supervision of digital assets to enhance investor protection through a working group.

"Most investors and market players are extremely deflated with negative headlines almost every day," said Nares Laopannarai, secretary-general of the Thai Digital Asset Association. "Rising regulatory risks will make it harder to restore the excitement in the market, which has already been hit by weakening global sentiment."

The country's SEC has also announced on Sept 1, the tightening of cryptocurrency firms' advertising rules, Blockchain.News reported.

In an emailed statement, the SEC told various crypto-related companies operating in the country that ads for digital assets must include clear and visible warnings about the risks of investing in cryptocurrencies.

The SEC tightened rules after discovering that some ads contain no warnings about crypto risks while other promotions feature only positive information.

According to a report from Bloomberg, active trading accounts in the country have fallen to 246,000 in August - which is a third of the tally in January.

Last month, SCB X Pcl cancelled its 18 billion baht plan to purchase a majority of Bitkub Online. The financial group, whose major shareholder is Thailand's royal family, said that the exchange operator's ongoing issues with regulators were the reason behind the cancellation.

“The collapse of digital-asset prices has wiped out a vast amount of wealth among Thai investors,” said Karin Boonlertvanich, executive vice president at Kasikornbank Pcl. “The realization of bubble-price risk will scare those people for quite some time to come.”

According to data from the SEC, the country has witnessed a slump in the trade of cryptocurrencies on licensed exchanges to 64 million baht in August - a number that has gone down since December 2020.

However, some companies have continued to believe in cryptocurrencies. Companies such as Thailand’s biggest private power producer, Gulf Energy Development Pcl, continue to bet on the growth of the crypto market as their plans for expanding into digital-asset businesses to diversify earnings have doubled down. The company, controlled by Thailand’s second-richest person, Sarath Ratanavadi, is seeking licenses from the SEC to operate a digital asset exchange and brokerage in partnership with Binance Holdings Ltd.

"We are confident about the potential for cryptocurrencies and digital assets as the world moves further and further into blockchain technology and related ecosystems," Yupapin Wangviwat, Gulf Energy’s chief financial officer, said in an interview last month. "Tokens with underlying assets will complement the transformations of most companies."