Thailand Securities and Exchange Commission (SEC) plans to take drastic measures against crypto lenders after crashes suffered in the subsector.
According to an announcement published by the regulator, the intention is to ban crypto lenders from providing their services. This would mean that digital asset business operators would not be able to provide staking and lending services.
In addition, it would also prohibit the advertisement of lending and depository services. Also, the move will stop operators from taking deposits of digital assets with a promise to pay returns to depositors.
Currently, the regulator is seeking input from the general public to be used for consideration of the subject matter. Therefore, it has opened a public hearing that will last until October 17 on the subject of sampling the opinions of contributors.
The regulator is towing this line to protect traders from the risk associated with such transactions.
Crypto lenders bow to market turbulence
Several crypto lenders did not fare well during the general market meltdown coupled with the collapse of the Terra ecosystem. The market turbulence forced many firms to make difficult decisions with many halting withdrawals and subsequently filing for bankruptcy.
In the case of Thailand, Zipmex a native crypto exchange was forced to halt withdrawals until further notice.
At the time, the crypto lender said several circumstances beyond its control informed the decision to halt withdrawals. It reportedly lent $100 million to troubled Babel Finance.
Afterward, the regulators launched a virtual hotline to attend to the grievances of the investors of the platform. It requested the crypto firm to make available an efficient communication channel to address the needs and grievances of its customers. The firm has contracted KordaMentha – an Australian restructuring firm to help with its recovery plan.
Just recently, Thailand SEC filed a police complaint against Zipmex for failing to provide its transactional information before the deadline. The regulators were requesting clarity on the platform’s withdrawal freeze back in July.
Aside from Zipmex, Celsius, another crypto lender halted withdrawal on its platform and later filed for bankruptcy protection. All of these platforms have user funds trapped in them, which makes the SEC move a timely one.