Thailand's Securities and Exchange Commission (SEC) on Tuesday issued new rules for cryptocurrency custody services, hoping to strengthen investor protection.
On January 17, the Thailand Securities and Exchange Commission issued regulations requiring virtual asset service providers (VASPs) to establish a digital wallet management system to ensure efficient custody. The new rules target crypto custodians, or VASPs, that provide encrypted storage services.
The regulation includes three main requirements, including the provision of policies and guidelines for overseeing digital wallet and private key risk management. The rules require VASPs to communicate with regulators regarding such policies and provide an action plan to ensure compliance.
Additionally, the SEC requires cryptocurrency custodians to provide policies and procedures for designing, developing, and managing digital wallets and keys. The agency will also require cryptocurrency custodians to develop contingency plans in case of unforeseen events that could affect wallet management systems. Thailand's move comes as global regulators have been accelerating their entry into the cryptocurrency industry as investors lost billions in the collapse of Bahamian cryptocurrency exchange FTX.
Thailand banned crypto lending and staking services in September after authorities faced criticism for failing to protect investors from Zipmex, an exchange that temporarily halted withdrawals last July. Thailand’s SEC’s latest crypto regulations are in line with the authorities’ plans to adopt stricter crypto regulations following industry failures such as the FTX crash. Earlier in January, authorities reportedly began a new investigation into local cryptocurrency exchange Zipmex, alleging that the company has been providing digital asset fund management services without a license.
New rules for cryptocurrency firms and custodians went into effect on Monday, with firms given a six-month grace period to comply.
