Following Thailand’s most popular cryptocurrency exchange, Bitkub launching a native token for its smart contract DeFi platform Tuktuk Finance, Thai’s watchdog, the Securities and Exchange Commission issued a stern notice.
Tuktuk Finance, a DeFi platform, had issued its native token, which apparently didn’t go down well with the Thai regulatory authorities. According to a report by Bangkok Post, the latter seized the opportunity to issue an announcement that said:
"The issuance of digital tokens must be authorised and overseen by the Securities and Exchange Commission, and the issuer is required to disclose information and offer the coins through the token portals licensed under the Digital Asset Decree."
TUK, which was launched on Sunday, May 31st, quickly “soared to several hundred US dollars and then collapsed to $1 within just a few minutes”, per the report. Meteoric rise and fall of tokens are not new with the cryptocurrency industry and the DeFi sector, where several food tokens plagued the space in the last summer and now, meme coins.
Thailand local cryptocurrency sector has been growing nicely but only through licensed cryptocurrency exchanges. Per a Bloomberg report in February, Thai’s cryptocurrency trading volume surged by about 600%, increasing from $574.5 million in November to $3.96 billion in February.
Bitkub exchange easily marshals the most significant volume in Thailand, servicing more than 300,000 local customers. The exchange established by a former Goldman Sachs employee, Atichanan Pulges represents 90% of local trade activity within Thailand.
With crypto’s recent boom, especially with Thai’s increasing trade volume, regulators began contemplating a slew of measures to curb the growing rise in a bid to mitigate some of the mishaps easily associated with cryptocurrencies. Ruenvadee Suwanmongkol, the SEC’s secretary-general, had said in an interview that
“Crypto participants, including platform operators and investors, are mostly young and passionate about new technology and decentralisation [...]They must realise any financial innovation also has the potential to cause collateral damage to the general public and financial system.”
On April 1, Thai’s SEC said that it would soon require traders to have experience, or take courses or pass an exam. In May, Thai’s Anti-Money Laundering Office announced that as of July, crypto exchanges must verify the identities of new customers in-person using a “dip-chip” machine. While it is not opting for an outright cryptocurrency trading and investment ban, Thailand’s regulators’ new KYC compliance rules seek to inhibit the growth of crypto, making it stringent to open and run a crypto trading and investment account. The new KYC rule also makes it legally impossible for foreign investors to access Thai exchanges. They can only do so if they have local ID cards that must be submitted before an account must be approved by Thai’s cryptocurrency exchange operators.
Whether Thai’s SEC would be able to clip DeFi growth within its sectors remains a mystery, especially as decentralised finance espouses financial products and tools that are not within the controls of a regulatory clampdown.