Thailand SEC bans crypto lending and staking companies to safeguard traders and reduce the risks associated with lenders. The recent crypto market crash has turned many companies into dust as they go bankrupt and are unable to pay their users back. It has also given us the perspective that chasing high returns with lending apps is not always the right move. So, this move by Thailand is to discourage investors from lending and staking their cryptocurrencies.
Crypto lenders in trouble
The sudden crash in the market and the Luna/UST fiasco have put lending platforms in trouble. One of the most popular platforms that went down was Celsius Network, but its demise also has negatively impacted other companies. Now, you can see that Thailand had to ban crypto lending and staking because of such things happening in the market. So, many platforms are halting withdrawals, and it is difficult for authorities to protect investors.
The SEC has clearly said that they are not going to allow platforms to take deposits and then allow the use of those deposits to borrow and invest into paying interest to investors. This brings leverage to the picture, which is a risky business considering the current volatility of the market.
This decision of the authorities was also impacted as Zipmex halted withdrawals in the country. Feedback was also taken from the common people who were impacted but the same. Do note that Zipmex has resumed withdrawals now, but the SEC is still keeping a close eye on the platform.
The problem with crypto lending platforms
There aren’t any strict regulations on the crypto industry, especially on crypto lending and staking platforms. Platforms take too much leverage, and that works fine during the bull run, but in a bear market, it has become the reason for their bankruptcy. Most platforms that went down recently were overleveraged, and the sudden market crash and the Luna collapse triggered their breaking point. This explains why companies are going down even after having billions of dollars in valuation.
What are your thoughts as the Thailand SEC bans crypto lending and staking companies? And do you think this is the right move to protect investors? Let us know in the comments below. And, if you found our content informative, do share it with your family and friends.
Also Read: Michael Saylor talks about the misconceptions surrounding Bitcoin.
