Thailand’s crypto market seeks clearer regulations as industry interest peaks
Thailand now claims to be one of the most regulated crypto-trading markets in the world, with exchanges required to meet strict regulatory standards. Earlier this year, for example, the country’s largest cryptocurrency exchange, Bitkub, was shut down by regulators after the trading platform experienced a series of lengthy service outages.
Despite these seemingly difficult circumstances, the country’s cryptocurrency market continues to flourish. However, the turning point came recently when Thailand’s securities commission announced plans to require a minimum annual income of one million baht (about $33,000) to invest in the country’s cryptocurrency industry.
The decision immediately sparked negative reactions from the local investment community – as it risked excluding low- and middle-income people from the cryptocurrency market – to the extent that the regulator had to clarify its above position within days of the decision’s announcement.
In this regard, the SEC noted that the previous version of the document was only a means of assessing investor sentiment, which SEC Thailand’s secretary general Ruenwadi Suwanmongkol said : I have proposed criteria that many consider too stringent to encourage people to speak out on this issue.
On this topic, Pinpraai Chakkapak, CEO of local cryptocurrency exchange ERX, told Cointelegraph that the original intent of the SEC was not malicious, but to create a mechanism to help protect investors from unwarranted market risks:
We understand the good intentions of the Securities and Exchange Commission. However, many players in the digital goods market and most of the public do not agree with this plan. From ERX’s point of view, this protection mechanism should not focus on minimum returns, but take the form of better information by operators and education of investors.
Regulation should not inhibit market growth
To better understand the situation, Cointelegraph spoke with Konstantin Anisimov, the CEO of CEX.IO, one of the most widely used encryption exchanges in Thailand. It believes that the SEC’s position, which could deny low-income families access to a potentially lucrative asset class, violates the fundamental principles of a free market economy and freedom of choice.
On the other hand, however, he acknowledged that if the majority of the low-income population lacks basic financial literacy and does not understand the risks of such investments, the SEC’s approach may be the only way to protect the public interest, Mr. Anisimov added:
Several approaches can be taken, and minimum income is just one of them. I am confident that the Thai Securities Commission will take into account the feedback from the investor community and act in the best interest of the people.
Additionally, in a statement provided to Cointelegraph, Akalarp Yimvilai, CEO of local crypto trading platform Zipmex, said that he sincerely believes the proposed legislation comes from a place of good intentions and serves to protect investors by minimizing unnecessary risks.
He pointed out that Thailand’s cryptocurrency market is still in its infancy and that there were regulations for using the space only about three years ago. As a result, the SEC is still in the process of creating a regulatory framework for this asset class that could protect investors from future risks. Nevertheless, Yimvilai continued to speak:
The bill is intended to provide protection, but it is also important to note that in doing so, it proposes a higher wall that will limit the ability of many people in this country to access digital assets. The key here, I think, is to work hand in hand with the SEC to make sure that this wall is stable and high.
Finally, it believes that the current project, if implemented, could lead to a significant increase in fraud, which could force investors to turn to an unregulated market where they could encounter uncharted territory. It could also lead to an outflow of much-needed capital from Thailand, which would have a negative impact on the country’s long-term development and finances.
Thai cryptocurrency market is booming
Thailand’s digital assets industry has experienced strong growth in recent months. According to the Securities and Exchange Commission (SEC), the number of crypto currency trading accounts in the country has increased from 160,000 at the end of 2020 to 470,000 as of January 1. February has gone up. In addition, approximately 50% of these accounts are held by investors under 30 years of age.
In addition, Mr. Chakkafak noted that the volume of cryptocurrency trading reached 18.44 billion in November 2020. TBT at 100.90 billion. TBT in February 2021, with a staggering 447.18% growth in just three months. He went on to say:
Investors who want to invest in the traditional stock market or in digital assets should be well educated and do thorough research. Our priority is to give investors the chance to learn and gain knowledge about investing in digital assets, as this is a new opportunity for all investors.
Moreover, according to Yimwilai, Zipmex generated $1 billion in revenue in Thailand by 2020, and that figure is expected to increase exponentially by 2021. In addition, the exchange firm managed to obtain $6 million in new funding from the US company VC Jump Capital.
He further pointed out that the assets under management of the company are currently estimated at around $100 million, which seems to confirm the idea that the Thai masses are ready to be the first to plunge into the burge cryptocurrency sector.
Does it look promising?
However, the SEC now appears to be deviating from its original draft of market access conditions. According to Suwanmongkol, those who invest their hard-earned money in cryptocurrents are usually new investors who are not fully aware of the risks involved in investing in risky and highly volatile assets. If the SEC stands idly by and does nothing, we will bear full responsibility when investors lose on cryptocurrency, she added.
Finally, the Securities and Exchange Commission recently hosted a dinner with representatives of local digital exchanges, suggesting that the government agency may still want to consult with prominent members of the field. A final hearing in this matter will take place on the 24th. March, completion of the investigation on the 27th. Mars.
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