The Securities and Exchange Commission (SEC) is preparing to require cryptocurrency exchange operators to disclose the risks involved in their trade, the regulator said on Thursday.
The SEC said the goal is for the rules to come into effect by mid-year, with the new rules requiring crypto exchange operators to specify the text in ads: "Cryptocurrencies are high risk. You may lose the entire investment amount."
In a statement, the regulator said: "Digital asset traders are also required to acknowledge such risks before using the service and trading to ensure that traders are knowledgeable, understand the risks of investing in cryptocurrencies and have sufficient information to make investment decisions."
According to the statement, the SEC talked with digital asset operators and market participants about improving cryptocurrency trading risk disclosure and setting a minimum purchase value for cryptocurrencies and digital assets.
The regulator earlier set a minimum trading value for cryptocurrency of 5,000 baht, but the proposal was rejected as the industry said it will affect the rights of traders who have limited financial capability.
According to the industry, such a rule could affect 46% of the total traders, possibly lowering the value of digital asset exchanges by 1.67%.
The SEC is reopening a hearing on a draft for cryptocurrency trading regulations.
The draft regulation has three main requirements.
The first is disclosure guidelines, in which cryptocurrency exchange operators, digital asset brokers and digital asset dealers are required to disclose warnings about the potential risks associated with cryptocurrencies.
Second, the warning "Cryptocurrencies are high risk. You may lose the entire amount invested" must be clearly visible, along with disclosure of the results of an investment suitability assessment, including the allocation and determination of the appropriate investment proportion, before the customer uses the service.
Third, operators must arrange for traders to give consent to acknowledge such risks before using the service, the statement said.
The new requirement is set to come into force 30 days after it is published in the Royal Gazette, or roughly around mid-2023.
The SEC is holding a public hearing on the draft announcement on regulatory guidelines for cryptocurrency trading.
The hearing is slated to continue until Feb 24 on the SEC's website.