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Thailand’s financial regulators have turned their sights towards decentralized finance (DeFi)

According to a June 1 report from the Bangkok Post, Thailand’s Securities and Exchange Commission (SEC) has regulated the cryptocurrency industry. Specifically, Thailand’s financial regulator has turned to decentralized finance (DeFi).

Thailand to target DeFi in latest regulatory clampdown

The SEC has announced that:

“Any activity related to DeFi may require a license from the financial regulator in the near future. We would target DeFi protocols that issue tokens.”

The latest regulatory push comes after the launch of a native token for Thailand’s DeFi protocol, Tuktuk Finance, on a smart contract platform operated by popular local crypto exchange Bitkub on Sunday.

The report notes that the price spiked to several hundred dollars before falling to $1 within minutes. According to the platform’s official website, the protocol has attracted a total locked-in value, or TVL, of $18 million, with the TUK token the last trading at $1.93 to give the project a market cap of $7.1 million.

This is the first time the SEC has specifically targeted DeFi, with the regulator stating:

“The issuance of digital tokens must be authorized and overseen by the Securities and Exchange Commission and the issuer is required to disclose information and offer the coins through the token portals licensed under the Digital Asset Decree.”

The CEO of Ava Advisor, an investment robot advisor app, Niran Pravithana, commented that:

“The announcement is reasonable as there are many fraudulent tokens issued and criminals can hide in messenger applications such as Telegram and manipulate the token prices.”

Centralized banks are among those already accepting DeFi in Thailand, with Siam Commercial Bank announcing a $50 million investment fund in February and Kbank experimenting with DeFi services as part of its business expansion plan in April.

Cryptocurrency adoption in Thailand has exploded with an increase of nearly 600% since November. DeFi has also grown in popularity, with The Defiant recently reporting that the country ranks second worldwide by search traffic for the keyword “decentralized finance” over the past year.

Regulators in the kingdom reacted in May, revealing plans to restrict the creation of new crypto exchange accounts with strict live KYC requirements starting in July. The measure will also prevent foreign investors from accessing Thai exchanges because they cannot secure local identification cards.

Digital asset trading actually remains higher in Asia than in Europe and the United States combined. Despite its popularity, however, it’s not all good news for crypto in the South Asian country. The Thai government has been clamping down with regulations on crypto. New crypto regulations require that anyone who wants to open up an account must physically register, and cannot be done online.

The new regulations will come into place from September 2021. They were introduced by the Anti-Money Laundering Office (AMLO) to curb money laundering in the Southeast Asian nation. Those wishing to set up a new crypto account will be required to submit key documents in person to register, as well as scan their Thai identification card in what is being referred to as a dip-chip machine. The dip-chip machine system has previously been employed to register gold traders in Thailand.

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