Thailand's Securities and Exchange Commission (SEC) is seeking to better protect cryptocurrency investors by establishing new crypto custody laws.
The Thai Securities and Exchange Commission (SEC) published regulations on January 17 requiring virtual asset service providers (VASP) to build a digital wallet management system to ensure efficient custody. The new regulations are aimed at crypto custodians or VASPs that offer crypto storage services.
Three important requirements are included in the regulations, including the supply of policy and procedures for managing the risk management of digital wallets and private keys. VASPs must communicate with authorities about such policies and create action plans to ensure compliance, according to the guidelines.
Furthermore, the SEC demanded that cryptocurrency custodians disclose plans and procedures for creating, developing, and administering digital wallets and keys. The government will also compel crypto custodians to develop a backup plan in the event of an unforeseen event that disrupts the wallet management system.
“This includes developing and testing action plans, identifying accountable parties, and reporting the event,” the SEC stated, adding:
“A system security audit, as well as a digital forensic investigation, are also necessary in the event of any event compromising the security of systems associated to digital asset custody, which could have a substantial impact on clients' assets.”
According to the release, the new regulations will go into force on January 16, 2023. Cryptocurrency custodians must completely comply within six months of the effective date.
Thailand's SEC's recent crypto laws are consistent with the authority's plans to implement more stringent crypto regulations in the aftermath of industry failures like as the FTX crash. The authorities reportedly launched a new inquiry against a local crypto exchange Zipmex in early January, alleging that the company was providing digital asset fund management services without authorisation.
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