While the Securities & Exchange Commission (SEC) of Thailand wants to amend certain laws for ensuring “investors’ protection”, there is a chance that during the process, crypto custodians would witness a ban debarring them to further sublet the investors’ assets for monetary gains. SEC, for this very purpose, has engaged with the public in a consultation process where the regulator seeks to obtain public proposals and viewpoints as to how it can bring crypto custodians in conformity with SEC’s objective of improvising protection of investors.
Thailand’s SEC has reportedly engaged with the general public through a process called “consultations” for bringing in certain amendments in the regulatory framework. The consultation is aimed at those who are involved in the asset management business, including crypto custodians. SEC wants to strengthen its supervisory and oversight control over the local virtual asset industry. SEC was of the view that currently, the regulatory framework is inadequate against investors’ protection. However, it has to be amended for improving and improvising the existing framework for ensuring ultimate investors’ protection.
SEC explained that asset managers, as well as crypto custodians, would be required to maintain records of the investors and their assets. The record would need to be correct, precise, and exclusive and must be updated on daily basis to eliminate any possible risk or danger. The guardians of investors’ assets must make sure also that they keep the assets safe against any potential risks as well, said SEC.
The Thai regulator also apprised that it has developed separate rules, standards, and regulations exclusively for virtual asset custodians. These rules, standards, and regulations are in addition to those which are already in place and applicable, said SEC. It was stated by SEC that crypto custodians would be obligated to obtain approval from SEC about its “decentralized nature business”. The regulator further clarified that the same principle would apply to those who are not crypto custodians but fiat or traditional asset managers/custodians. However, banks and financial institutions have been excluded and the amendments would not apply to them.
Meanwhile, there is a chance that SEC might proceed to impose a ban upon crypto custodians. They could be debarred from further subletting the investors’ assets that are lying with them. The regulator noted that crypto custodians while offering custodian services, were further subletting assets belonging to the investors to third parties. Against further subletting, the custodians were earning monetary gains. However, this type of practice involves grave risks as the investors’ assets are exposed to potentially harmful risks. SEC suggested that crypto custodians would not be allowed to earn any monetary gains on the basis of assets belonging to the investors.
Again, this provision shall not apply to banks and banking institutions that are excluded by the regulator deliberately and logically.