Thailand Joins Singapore in Banning Crypto Lending Services

Thailand has joined Singapore in banning retail lending and staking services amid growing global scrutiny of crypto exchanges.

Thailand’s SEC announced on July 3 that crypto exchanges are prohibited from providing lending and betting services to retail customers. The news comes hours after the Monetary Authority of Singapore (MAS) revealed new measures to protect investors.

MAS has announced a ban on cryptocurrency exchanges in Singapore from providing lending and betting services to retail customers.

Thai SEC Prioritizes Investor Protection in New Crypto Exchange Rules

Like Singapore, the Thai regulator's move suggests it is prioritizing investor protection.

However, in contrast to retail investors, the ban does not prohibit crypto exchanges from betting on and lending cryptocurrencies to institutional clients. In exact words, the announcement confirms that the ban applies to all "deposit services that provide returns to savers and lenders."

In addition, the Thai SEC has introduced a mandatory trade risk disclaimer. Cryptocurrency exchanges must display trading risk disclosures to customers in clear and comprehensive language.

Cryptocurrencies are very risky. Please thoroughly research and understand the risks of cryptocurrencies as you could lose your entire investment," the disclaimer reads.

Additionally, crypto exchange operators must ensure that customers acknowledge the potential risks of crypto trading before agreeing to use their services. They must conduct an investor suitability assessment to determine how much a user can invest in a cryptocurrency.

Thai regulators first banned crypto as a form of payment in March 2022, effective April 1, 2022.

The regulator cited concerns over the potential risk of financial instability that cryptocurrencies could pose to the country’s economy.

It also highlights the risk of loss of value due to price volatility, cyber theft and leaks of personal data, which are reasons for banning crypto payments.

Additionally, Thailand’s SEC stated that cryptocurrencies may facilitate money laundering.

Singapore bans crypto staking and lending services for retail customers

The Thai SEC's move follows an announcement by the Monetary Authority of Singapore (MAS) on July 3. MAS prohibits exchange operators from providing lending and betting services to retail customers.

The financial regulator authorized crypto exchanges to transfer all client assets to trust funds by the end of 2023. The measure is designed to prevent crypto exchanges from mixing customer funds and reduce the risk of confusion like FTX.

Crypto exchanges face fallout from FTX crash

In the fourth quarter of 2022, FTX collapsed along with billions of dollars in customer assets after an overwhelming investor run exposed a balance sheet deficit.

Further disclosures revealed that the exchange was commingling client funds with its sister company, Alameda Research, which had holes in its balance sheet.

The FTX fiasco impacted the crypto market, escalating an existing bear market and plunging asset prices even further.

The knock-on effect has seen many crypto-focused companies pack up bankruptcy filings and awaken regulatory scrutiny of longstanding companies. Regulators around the world used the FTX disaster as a case study to enact new measures to protect investors from losing their funds.