Public alerted to perils of crypto mining

The Securities and Exchange Commission (SEC) has warned investors to exercise caution and prudence before investing in cryptocurrency mining because of multiple risks and the lack of supervision by Thai regulators.

A current ad featured online and on outdoor billboards invites the public to invest in cryptocurrency mining.

According to the SEC statement, the ad encourages the public to invest by buying or renting equipment, or investing in the processing power of such equipment, stating that such an investment would earn a high rate of return.

The regulator said investing in cryptocurrency mining involves a number of risks that must be considered carefully, including the volatility of cryptocurrency prices, risks to competitive market conditions, equipment deterioration and rising electricity costs.

There may be a security risk to the personal data and property of investors, as well as possible scams that do not include an actual investment, said the SEC.

In addition, the cryptocurrency mining business is not supervised under the Digital Asset Business Act of 2018 by any regulator.

If an operator wants to issue digital tokens or provide trading services, it must obtain a business licence. Failure to do so will result in penalties as prescribed by law.

“The SEC and related agencies are in the process of reviewing digital asset regulatory guidelines in order to provide appropriate investor protection,” the SEC said in the statement.

Cryptocurrency mining is defined as a miner using a device to run a mining computer program, receiving cryptocurrency as a reward when the conditions set by the program have been met.

In a related matter, the SEC is improving the criteria regarding digital asset operators’ capital and is holding a public hearing on the subject from Nov 10 to Dec 12.

The new criteria will be immediately applied to new business operators, while existing ones will have a one-year grace period to meet the new requirements.

The new rules require a digital asset exchange operator to increase its paid-up capital to 100 million baht from the present level of 50 million baht, while a digital asset broker must raise its paid-up capital to 50 million baht from the present level of 25 million. A digital asset dealer must raise its paid-up capital to 50 million baht from the current level of 5 million.

Kasikorn Research Center reported at the end of October the global cryptocurrency market had been very volatile and in a downtrend since early this year, facing several crises of confidence.

The collapse of certain cryptocurrencies and stablecoins as well as the bankruptcies of some cryptocurrency lending platforms affected market confidence.

The rise in interest rates around the world is also a major reason for the sales of risky assets such as cryptocurrencies, said the think tank.

As of Nov 9, 2022, the total market capitalisation of cryptocurrency on coingecko.com stood at around US$950 billion, down more than 50% since the start of the year.