The Securities and Exchange Commission (SEC) of Thailand is working to better protect cryptocurrency investors by introducing new rules for crypto custody services.
Thai SEC on Jan. 17 issued regulations requiring virtual asset service providers (VASP) to establish a digital wallet management system to guarantee efficient custody. The new rules target crypto custodians, or VASPs that provide crypto storage services.
The regulations include three major requirements, including provision of policy and guidelines for overseeing risk management of digital wallets and private keys. The rules require VASPs to communicate with regulators regarding such policies and provide action plans to ensure compliance.
Additionally, the SEC requested crypto custodians to provide policy and procedures for design, development and management of digital wallets and keys. The authority will also require crypto custodians to establish a contingency plan in case of occurrence of various unforeseen events that may affect the wallet management system.
“This includes laying out and testing action procedures, designating responsible persons and reporting the event,” the SEC stated, adding:
“An audit of system security is also required as well as digital forensic investigation in case of any event affecting the security of systems related to digital asset custody, which could cause significant impacts on clients’ assets.”
According to the announcement, the new regulations have taken effect starting from Jan. 16, 2023. Crypto custodians are required to fully comply within six months from the effective date, the SEC added.
The latest crypto regulations by Thailand’s SEC come in line with the authority’s plans to adopt more strict crypto regulations in the aftermath of industry failures like the FTX collapse. In early January, the authority reportedly started a new investigation against a local crypto exchange Zipmex, alleging that the firm has been providing digital asset fund management services without permission.