The Securities and Exchange Commission (SEC) of Thailand has introduced new regulations for cryptocurrency custody services in an effort to better protect investors.
The Thai SEC published regulations on January 17 requiring virtual asset service providers (VASP) to set up a digital wallet management system to ensure effective custody. The new regulations are directed at VASPs, or crypto custodians, who offer services for crypto storage.
The new regulations, published on January 17, require virtual asset service providers (VASPs) to set up a digital wallet management system to ensure effective custody.
Three essential needs are listed in the regulations, including the implementation of a policy and set of rules for regulating how digital wallets and private keys are managed in terms of risk. The regulations mandate that VASPs share information on such policies with authorities and present action plans to guarantee compliance.
The SEC also asked cryptocurrency custodians to provide policies and processes for creating, developing, and administering digital wallets and keys and have a backup plan in case of unexpected events that may compromise the wallet management system.
The SEC stated:
“Contingency plan in case of occurrence of any event that may affect the management system of digital wallets and keys. This includes laying out and testing action procedures, designating responsible persons and reporting the event.”
The SEC also stated that in the event of any incident affecting the security of systems associated with the custody of digital assets, which could have a major impact on clients’ assets, a system security audit and digital forensic inquiry would be necessary.
The new regulations became effective on January 16, 2023, and crypto custodians have six months to comply fully.
The Thai SEC started an investigation into Zipmex earlier this month to determine if the firm’s revenue-generating products had broken any laws. Local law enforcement authorities are also investigating any violations of the terms of service for digital asset providers.
The Thai SEC is making concerted efforts to assure compliance throughout the nation’s financial industry and protect investors from fraud or misconduct.
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