Thailand’s SEC Drafts Regulation to Ban Encrypted Pledge and Lending Transactions

03/10/2023 09:23 • Digital Disruptors • 91 views

On March 10, the Securities and Exchange Commission of Thailand officially announced on March 8 that it was seeking public opinions on a draft regulation prohibiting virtual asset service providers (VASPs) from providing or participating in any type of encrypted pledge and lending transactions.

Thailand SEC solicits public opinions on the ban on cryptocurrency lending and pledge

Analysis based on this information:

The Securities and Exchange Commission (SEC) of Thailand recently announced its plans to prohibit virtual asset service providers (VASPs) from engaging in any form of encrypted pledge and lending transactions. This draft regulation seeks to regulate the use of virtual assets in the country and mitigate the risks associated with such transactions. The SEC has invited public comments on this draft proposal, indicating the importance it attaches to stakeholder engagement in building regulatory frameworks for the emerging technology.

VASPs are companies that facilitate the buying, selling, holding, or trading of virtual assets such as cryptocurrencies. The proposed ban can have a significant impact on VASPs who offer such services, as it would limit their ability to offer transactions with cryptocurrencies as collateral. This means that lenders would have to seek alternative methods of securing loans, reducing the overall use of digital currencies in financial transactions.

The regulator’s concern is mainly focused on reducing the possibility of money laundering, tax evasion, and financing terrorism while increasing investor protection. The encrypted nature of virtual assets makes them attractive for illegal activities, as transactions in these currencies are harder to track and monitor than traditional finances. The SEC proposal emphasizes that any VASP involved in such activities would be violating the current Money Laundering Prevention Act, leading to heavy penalties and criminal charges.

The proposal could bring challenges for companies that provide a platform for peer-to-peer lending and borrowing. Peer-to-peer lending platforms are groups that allow individuals to lend and borrow money from each other without involving traditional financial institutions. However, many of these platforms have started accepting digital currencies as collateral, a practice that could be affected by the proposed regulation.

In conclusion, the proposal by Thailand’s SEC is a reflection of the broader push by regulators worldwide to regulate the use of digital currencies. As the use of cryptocurrencies increases, it is essential to ensure that their use is not for illegal activities such as money laundering or financing terrorism. The proposal is a step towards creating more transparency and accountability in the financial industry, ensuring investor protection, and increasing public trust in virtual assets.

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Thailand’s SEC Drafts Regulation to Ban Encrypted Pledge and Lending Transactions

Thailand SEC solicits public opinions on the ban on cryptocurrency lending and pledge

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