The Securities and Exchange Commission (SEC) is conducting a public hearing this month to determine qualifications for investors wanting to open a cryptocurrency trading account.
New investors are flocking to the cryptocurrency market, says SEC secretary-general Ruenvadee Suwanmongkol.
The qualifications for cryptocurrency traders are to ensure new retail investors opening crypto trading accounts have sufficient financial buffers to absorb risk from volatile price swings.
The SEC's concerns over investors' financial safety rose following the surge in cryptocurrency prices during the past few months and the rapid increase in the number of new accounts on local digital exchanges and intermediaries.
Finance Minister Arkhom Termpittayapaisith asked the SEC to supervise the local digital exchanges to protect new investors who joined the market hoping for outsized gains, with little knowledge or experience of that in which they are investing.
Retail investors' net buying of digital assets has grown from 500 million baht in November and 1.1 billion in December last year to 1.2 billion in January. Purchases of digital assets tallied 400 million baht in only the first eight days of February, according to the SEC's weekly report on digital assets.
The regulator reported the number of new investors rose by 124,000 accounts within the first week of this month, totalling 594,000 accounts as of Feb 8.
The total trading value of local cryptocurrency exchanges from Jan 1 to Feb 8 was 130 billion baht.
Bitcoin is the most traded cryptocoin and contributed 40.3% or 38.9 billion of total trading volume, followed by ethereum (23.5 billion baht or 24.3%), dogecoin (18.2 billion or 18.8%) and XRP (12.3 billion or 12.6%).
Top returns among asset classes from Jan 1 to Feb 8 were ethereum (145%), followed by XRP (118%), bitcoin (59.6%), MSCI emerging market (9.13%), MSCI AC Asia Pacific Index (8.08%), Nasdaq (6.20%), SET (4.96%), MSCI World Index (4.03%), the US government's 10-year bond (1.16%) and gold (-2.88%).
"Cryptocurrencies have high risks for investors. We should set some screening criteria such as age, trading experience and level of revenue or wealth to limit risks. These limits already exist for high-yield bonds, which are only available to some types of investors," Ms Ruenvadee said.
She said cryptocurrency traders should have financial knowledge, trading experience and financial status. They should be both "well-informed and well-off", with experience in investment and a certain level of wealth to balance the high risk of these assets.
"Digital assets are a big challenge, not only in Thailand but for global regulators," said Ms Ruenvadee.
The SEC is regulating two key areas of concerns: market development and investor protection.
Suppakrit Boonsat, president of the Thai Digital Asset Association, said experience is the best teacher. The regulator's role should be to help investors stand on their feet, and provide a cushion to support them when they fall, he said.
In the future, digital tokens are to be issued based on physical assets, or through a securities token offering (STO). STO and utility tokens that are not readily exchangeable with products and services will be regulated under the Securities and Exchange Act, while cryptocurrencies and ready-to-use utility tokens will remain under the Digital Assets Decree.