The Securities and Exchange Commission (SEC) is tightening rules for cryptocurrency trading to increase investor protection, demanding digital asset operators include risk disclosure in their advertisements and prohibiting them from providing services or supporting deposit taking and lending.
Effective July 31, cryptocurrency exchange operators, brokers and traders must provide a warning about the potential risks associated with trading cryptocurrencies. This change, which has already been published in the Royal Gazette, has been made so investors and traders receive sufficient information about the risks of cryptocurrencies.
The important point of the new guideline is that the warning message "Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly because you may lose the entire investment amount" must be clearly visible in their ads.
The operators are also required to issue notifications of the investment suitability assessment results and the allocation and determination of the appropriate investment proportion (basic asset allocation) before the customer uses the service. In addition, they must arrange for the service users to give their consent and acknowledge such risks before using the service.
Another key point of the new guideline is that digital asset business operators are prohibited from providing services or supporting deposit taking and lending services, with certain exceptions as specified in the announcement. This comes into force on Aug 30.
Under the new rule, the operators must not accept deposits of digital assets and bring the deposited digital assets to lend or invest to get returns for depositors. Secondly, they are prohibited from accepting deposits of digital assets by giving or proposing to give returns on deposits of digital assets or other returns to the depositor.
"It is forbidden to advertise or persuade the general public or do any other act in the manner of supporting deposit taking and lending services," the SEC said a statement yesterday.
According to the regulator, global digital asset market capitalisation as of June 26 stood at US$1.28 trillion, up 10.2% from a week earlier. Bitcoin is the world's largest digital asset, dominating about half of that market capitalisation.
Bitcoin gave the highest return among other asset classes this year, with a year-to-date return of 81%, followed by Ethereum at 52.8%, and 35.2% for investments on the Nasdaq. Meanwhile, the Stock Exchange of Thailand yielded a negative return of 11.5%.
According to coingecko.com, Bitcoin was quoted at $30,682 yesterday afternoon, an increase of 0.6% from the day before.
According to investing.com, Bitcoin surged 14.4% over the last three days, the highest gain in two months as a large number of exchange-traded fund subscriptions track the world's largest cryptocurrencies. This has prompted optimism regarding a growing institutional investor interest in digital tokens.
