Crypto income demand ditched

Crypto income demand ditched

SEC scraps requirement due to public’s negative response

A file photo shows a visual representation of the virtual currency bitcoin.
A file photo shows a visual representation of the virtual currency bitcoin.

The Securities and Exchange Commission (SEC) has scrapped its plan to impose a minimum income requirement of 1 million baht per year for cryptocurrency traders, following an overwhelmingly negative response to the proposal at several public hearings held last month online.

However, the SEC will still require cryptocurrency exchange operators to provide information regarding investment and risks to traders to better inform investors of the highly speculative nature of the assets, which are not tied to market fundamentals.

To qualify as cryptocurrency traders, candidates must complete at least one of three options: a test of their experience in cryptocurrency trading, attend an online cryptocurrency investment training course, or pass a test of their knowledge.

The SEC’s public hearing on investor qualifications for cryptocurrencies and regulations for business operators began on Feb 25 and ended March 27, involving 6,932 participants.

Following the results of the hearing, many cryptocurrency traders welcomed the SEC’s decision to reject the income requirement that far exceeded median salaries in Bangkok, and would have effectively barred most of the country from buying and selling these digital assets.

Liberating local cryptocurrency traders from unreasonable financial requirements will help build a more equitable digital asset ecosystem in the long term, said Suppakrit Boonsat, president of the Thai Digital Asset Association, and Peeraphat Hankongkaew, chief executive at Blockchain Review.

SEC secretary-general Ruenvadee Suwanmongkol said most of the respondents, which included various industry stakeholders, did not agree with the 1-million-baht requirement and the regulator responded accordingly by not proposing the requirement to its board of directors.

The SEC’s new focus is setting up the knowledge tests for new traders. Traders who have already opened trading accounts or those the SEC recognises as experienced traders based on open accounts for stock trading will not be required to take a test again, she said.

Ms Ruenvadee said the SEC collaborated with the private sector and market experts to organise a training course on the fundamentals of cryptocurrency trading for investors under the concept of “Smart-to-invest”.

The online course is scheduled to run every Thursday starting on April 8.

Palakorn Yodchomyan, a co-founder and chief executive of the decentralised cryptocurrency exchange KULAP, said he is satisfied with the regulator’s decision to ditch the income requirement and agrees with the new rule that exchanges must educate new users on how to avoid losses and mitigate risks.

“We don’t want too many regulations as they may bar people from accessing new investments,” said Mr Palakorn.

“We agree traders need protection, but learning through practice will also help them to gain direct experience and learn faster. It’s the best compromise. If the SEC didn’t set any criteria, it might lead to problems later if operators were unable to provide enough support for their customers.”

Mr Peeraphat said in the past, the local cryptocurrency industry learned its lesson about unbalanced growth. Digital asset exchanges only focused on advertising to attract new customers to their platforms without providing support to help traders protect themselves from losses.

Market participants may be affected by the SEC’s resolution requiring prospective traders to take knowledge tests, but in the long term this will create a better ecosystem, he said.

“It would be great if each exchange issued an investment guidebook for traders,” said Mr Peeraphat.

Mr Suppakrit was “content” with the SEC decision because it is good for the market — people in the community are active and keen to voice opinions, while the regulator is open-minded and ready to listen.

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