Thailand to target DeFi in latest regulatory clampdown

In their latest effort to regulate the cryptocurrency industry, Thailand’s financial regulators have turned their sights toward decentralized finance, or DeFi.

According to a June 1 report from Bangkok Post, Thailand’s Securities and Exchange Commission (SEC) has announced that any activities related to DeFi may require a license from the financial regulator in the near future. The SEC specifically stated it will target DeFi protocols that issue tokens.

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

The report notes that prices skyrocketed to “several hundred dollars” before collapsing to $1 within just a few minutes. According to the platform’s official website, the protocol has attracted a total value locked of $18 million, with the TUK token last trading at $1.93 to give the project a market cap of $7.1 million.

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

“The issuance of digital tokens must be authorised 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.”

Niran Pravithana, CEO of Ava Advisor — an investment robo-advisor app — 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 token prices.

Centralized banks are among those that have embraced 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.

As reported by Cointelegraph in April, crypto adoption in Thailand has been booming, with an increase of almost 600% since November 2020. DeFi has also grown in popularity, with The Defiant recently reporting that the country ranked second worldwide by search traffic for the keyword “decentralized finance” over the past year.

Regulators in the nation responded in May, unveiling plans to curb the creation of new crypto exchange accounts via stringent in-person Know Your Customer requirements beginning in July. The measure will also prevent foreign investors from accessing Thai exchanges, as they are unable to secure local ID cards.