Both Thailand and Singapore have recently increased their scrutiny on crypto exchanges, particularly concerning the prohibition of retail lending and staking services. This move highlights an undeniable emphasis on investor protection, following in the footsteps of the Thai Securities and Exchanges Commission, which enforced a similar ban on July 3. This act prevents exchanges from implementing lending and staking services for regular consumers, but intriguingly, it leaves room for institutional customers to engage in these activities.
The ban targets all “depository services that offer returns to depositors and lenders,” displaying an unambiguous stand against high-risk cryptocurrency activities among retail customers. To further reinforce this point, the Thai SEC has insisted on a mandatory trading risks disclosure, which the exchanges are obligated to present in a concise and visible manner to clients. One of the key messages within this disclosure reads: “Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly because you may lose your entire investment.”
Moreover, the exchange operators are required to confirm customer acknowledgement of potential risks associated with crypto trading before consenting to use their services. The operators must also assess investor suitability to determine how much users can invest in crypto. It’s a switch of emphasis that could yield significant repercussions for the crypto industry.
Interestingly, this isn’t the first attempt by the Thai regulator to inhibit cryptos’ growth. Back in March 2022, a ban on crypto as a payment method within the country was introduced, citing potential risks such as financial instability on the economy and the loss of value due to high price volatility. The authority also raised concerns over cybersecurity threats such as data leakage and potential facilitation of money laundering.
Parallel to these measures, Singapore’s ban on retail cryptocurrency staking and lending services came to light. As per the Monetary Authority of Singapore (MAS) directive, exchange operators are required to transfer all customer assets into a Trust by the end of 2023 to guard against the intermingling of customer funds and potential chaos akin to the FTX collapse.
The fall of FTX in Q4 2022 made headlines due to its multi-billion dollar impact on customer assets and spurred an already flailing bear market. The alarming event also precipitated a string of bankruptcy filings from several crypto-focused companies. The aftermath of the FTX crisis has prompted regulators globally to adopt new protective measures for investors, as seen in the actions taken by governments in Thailand and Singapore.
Source: Cryptonews
