The SEC in Thailand has announced that jobs that involve decentralized fund (DeFi) may need a permit from the ruler. Chinese blockchain journalist, Colin Wu of this @WuBlockchain fame tweeted the announcement.
“First official announcement on DeFi in Thailand SEC: Activities related to decentralised fund (DeFi) jobs which involve digital coin issuance may require a licence from the ruler in the not too distant future.”
Thailand’s financial authorities introduced the information on Sunday afternoon, which makes it the first official announcement to govern the cryptocurrency industry.
Regulators Goal DeFi
The SEC published the statement after a DeFi farming platform, Tuktuk fund, surfaced on Bitkub Chain, and also the price of its native token rose to hundreds of dollars and collapsed to $1 in a matter of minutes. This made the regulators goal DeFi specifically.
DeFi has many emerging monetary technologies related to this, making the imposition of regulations a challenge. DeFi smart contracts are used in popular blockchain services like borrowing and lending. Additionally, it overlooks the issuance of digital tokens under these wise contracts with any aid from traditional financial services.
The SEC stated that,
“The issuance of digital tokens must be licensed and regulated by the Securities and Exchange Commission and the issuer must disclose information and offer the coins throughout the token portals accredited under the Digital Asset Decree.”
For a company provider, the operator of this service should consider the regulation before proceeding. Dealers will need to study and research the security and technical particulars of the DeFi farming project before becoming involved. Regulations will decrease the number of fake tokens.
The blockchain community believes the warning is the ideal thing to do. Dome Charoenyost, the creator of Tokenine, is one of these. He claims that the law provides the SEC the ability to govern coin issuance and oversee licensed intermediaries.
“It’s become clearer that some types of DeFi have been under-regulated, and we could see that the SEC-regulated DeFi platforms in the future.”
Will There Be A Loss of Chances?
“These criminals can hide in messenger application Telegram and control the token prices and these illegal activities can easily go undetected by the authorities.”
He also notes that the regulator must open a safe space for validated businesses with a fast approval process to prevent losing opportunities. Niran pointed out that questions related to the definition of first coin offering are yet to be addressed and discussed.
The regulations might not fully protect traders since it is applicable only for Thai established firms. Many DeFi trades aren’t Thai-based, and the vast majority of all DeFi developers prefer to remain anonymous.
Three-Point Risk Assessment For Traders
- The Entire Value Locked (TVL) needs to be over $100 Million
- The operating period should be long enough and well-audited to verify the coding of computer applications
- Dealers should seek extra information on the Trustworthiness of the platform along with the venture capital firm backing the job
These factors will help filter out coding dangers that might lead to rug-pulls. Dealers are also known to put large amounts of principal to farm stablecoins together with all the hopes of high yields, but the price of stablecoins will differ, opposing popular beliefs. Akradet claims,
“Indeed, there’s a risk that the principal could be lost from several factors like the security dangers including cyberattacks scams that are malicious as a result of insufficient cybersecurity or technical glitches”
Stringent Potential For Crypto In Thailand
Crypto adoption in Thailand has seen a massive rise, and DeFi has also grown in popularity. The country ranked second globally for search traffic for the keyword”decentralized fund” over the last year. TradeFi institutions have contributed to the popularity as well.
Centralized banks have embraced DeFi in Thailand: Siam Commercial Bank announced a $50 million investment fund in February. Kbank will be experimenting with DeFi services as part of its business growth plan.
Regulators responded in May with plans to curtail new crypto exchange account creation by setting stringent KYC requirements set for a mandate starting July 2021. This measure will stop foreign investors out of accessing Thai exchanges as procuring local ID cards won’t be possible.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be utilized as legal, tax, investment, financial, or other advice.