Thai SEC issues crypto custody provider laws

Thai SEC issues crypto custody provider laws

  • The SEC is willing to introduce new crypto laws related to crypto custody services. 
  • The securities regulator of Thailand requires crypto custodians to have contingency plans for emergencies.

On January 17, the Securities Exchange Commission of Thailand passed laws that needed digital asset service providers to build a virtual wallet management system to ensure efficient custody. The fresh laws are aimed at crypto custodians or Virtual Asset Service Providers (VASPs) that give crypto storage services. 

The laws have three main needs, including the supply of laws and guidelines to look after risk management of virtual wallets and private keys. The laws need VASPs to have a conversation with regulators for those laws and draft action plans to effectuate compliance.

Not only this, the Securities Exchange Commission asked crypto custodians to give laws and the process for designing, building, and monitoring virtual wallets along with keys. Crypto custodians will also be required to draft a contingency plan for unexpected events which could hurt the wallet management system. 

As per the SEC, “It involves the arrangement, outline, and testing action process, appointing accountable people and outlining the event.” The commission also added that “ an audit of system security is also needed along with the virtual forensic examination if and only if any happening influencing the security of systems associated to the virtual asset custody, which can result to crucial effects on clients’ assets.”

The new laws will be effective from January 16, 2023 onwards. Crypto custodians are needed to complete work in accordance in less than six months from the active date. 

The newest and the most recent laws by the Securities Exchange Commission of Thailand line up with the authority’s plans to be more vigilant and develop regulations to prevent FTX like situations. In the beginning of January, the force allegedly initiated a fresh examination against a local crypto exchange known as Zipmex, reporting that the company has been giving virtual asset fund management services without asking the requisite permit.

Since then, the Thai regulator has conveyed that it will tighten the laws for crypto with investor security as its prime target. It also aims to make tighter rules for crypto ads as well as a nation-wide prohibition of crypto lending.