Thailand’s Securities and Exchange Commission (SEC) has recently decided to ban crypto companies from offering staking and lending services. The primary reason behind doing so was to safeguard traders from the potential risks that are associated with crypto lenders.
Many prominent crypto lenders have also suffered liquidity issues in recent times owing to the market downturn. The decision to ban the “depository services” includes paying returns to the depositors, and it was created to primarily protect traders from the risks that have been associated with crypto lenders.
Crypto lenders such as Celsius Network and Babel Finance, those that were offering lending services, froze their withdrawals in the past few months owing to the industry-wide decline.
Market movers such as Bitcoin and Ethereum have lost more than 50% of their market value since the beginning of 2022. Zipmex is also one of the beleaguered exchanges that have halted withdrawals. The exchange has entities in Singapore, Thailand, Australia, and Indonesia.
Move Comes After Crypto Exchanges Faced Bankruptcy
Liquidity problems have been a concern for crypto exchanges this year, specifically given that the industry has staggered under a difficult situation.
Exchanges have reported serious liquidity concerns in 2022. Some lenders had planned on providing higher interest rates to depositors, and they, in turn, also faced bankruptcy as the market crashed.
The Thai SEC had proposed that
Prohibit crypto business operators from taking deposits of digital assets and further using those digital assets to borrow and invest to pay the depositors. Prohibiting advertising or soliciting the general public or conducting any activities that would support deposit-taking or lending services. Prohibiting the digital business operators from accepting digital assets and paying returns to the depositors.
The Thai SEC has also conducted an inquiry regarding the losses that were faced by the public. It has taken in feedback regarding the impact caused by Zipmex through an online forum.
The withdrawals of Zipmex have now resumed for the customers in Thailand, but this hasn’t taken the exchange off the SEC’s radar.
Zipmex’s Current Situation
The Thai SEC started to get involved due to the liquidity issues that were faced by the exchange, Zipmex, starting in July 2022.
At that point, Zipmex had a strong presence in Southeast Asian countries. It had just halted deposits and withdrawals on the platform.
At the moment, Zipmex has assured that it has been working with the SEC closely and is fully complying with the necessary standards and security measures.
The SEC has also decided to implement stringent advertising rules for crypto firms that have been operating within the country since October 1.
The firms will have to cut back on advertising by directly promoting crypto to the “official channels” as well as their own websites and will be required to provide details of adverts and spending.
This includes the role of social media influencers and bloggers, as well as their terms with the SEC.