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Thailand’s SEC proposes to ban virtual asset service providers from encrypted pledge and lending transactions

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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 prohi…

Thailands SEC proposes to ban virtual asset service providers from encrypted pledge and lending transactions

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:


In recent years, virtual assets such as cryptocurrencies have gained popularity as an alternative form of investment and transaction medium. Virtual asset service providers (VASPs) have emerged as a crucial player in this ecosystem by facilitating the buying, selling, holding, and transferring of these virtual assets. However, with the rise in demand for virtual asset investing and transactions also come risks and concerns, particularly with regards to security, legality, and regulation.

In response to these concerns, the Securities and Exchange Commission (SEC) of Thailand has proposed a new draft regulation that seeks to prohibit VASPs from providing or participating in any type of encrypted pledge and lending transactions. The regulation would require VASPs to undergo a thorough screening process and register with the SEC before engaging in any virtual asset-related activities. The SEC has also invited public opinions on the draft regulation before finalizing it.

The SEC’s move is not unexpected given the increasing amount of fraudulent and illegal virtual asset-related activities in Thailand over the past years. In 2018, Thai authorities arrested a man for using rogue cryptocurrency applications which led to the theft of over 500 million baht (US$16 million) from unsuspecting investors. Similarly, in 2020, Thai authorities arrested 24 Chinese nationals for operating a fraudulent investment scheme involving cryptocurrencies.

The proposed regulation is aimed at tightening the oversight of virtual asset transactions and preventing VASPs from becoming avenues for illicit activities. By prohibiting VASPs from participating in encrypted pledge and lending transactions, the SEC hopes to prevent the use of virtual assets as collateral for illegal activities such as money laundering, terrorism financing, and fraud. Additionally, the regulation would enable the SEC to monitor and supervise virtual asset-related activities more effectively, thereby reducing the risks associated with virtual asset investments and transactions.

In conclusion, Thailand’s SEC’s proposal to ban VASPs from encrypted pledge and lending transactions is a step towards regulating the virtual asset industry in the country. The proposed regulation would enhance investor protection, prevent illicit activities, and promote the development of a transparent and legitimate virtual asset ecosystem. However, the regulation is still subject to stakeholders’ feedback and comments before finalizing, and it remains to be seen whether it will be implemented and enforced effectively.

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