Thailand’s Securities and Exchange Commission (SEC) has warned digital asset platforms against promoting crypto and misleading advertising. According to local reports, these platforms must be careful with their advertisements and focus on benefiting investors.
The warning follows the regulator’s advice efforts to strictly regulate the country amid growing concerns over online crypto-related scams.
Exchange ads must comply with regulatory rules
The Bangkok Post informed Monday of the SEC’s latest crackdown on Thailand’s crypto industry. According to the report, the country’s regulator has warned the digital asset exchange to proceed with discretion.
The SEC warns platforms about advertising and hosting Introducing Broker Agent (IBA) events because these activities could “violate the rules” under the agency’s supervision.
Crypto exchanges must follow the country’s regulatory business standards to operate and focus on the benefit of investors. All advertising and commercial promotions must therefore be free from false, exaggerated, distorted, obscuring or misleading information.
Additionally, advertisements and promotions are necessary to warn investors of the risks of crypto investments. The regulatory framework also requires that promotional campaigns “not pressure customers” to decide whether to use an exchange to invest in digital assets.
The SEC noted that IBAs cannot promote digital token services “to avoid speculation in cryptocurrencies, which are high-risk assets”.
Anek Yooyuen, deputy secretary general of the SEC, said stock exchanges “often attract investments by offering special privileges to the public.” As such, these offers tend to attract investors to trade on their platforms:
When operators run sales promotions by offering rewards to entice people to use the service, this could encourage use of the service without considering investment risks. This is particularly the case for cryptocurrencies.
Crypto Ads, a Global Regulatory Concern
Crypto ad regulation is a hot topic among regulators. In 2022, the Spanish National Securities Market Commission (CNMV) published a new regulatory framework to combat advertising.
The rule change stipulated that advertisers and companies attempting to market digital assets must inform Spain’s watchdog of the content of their promotional campaigns at least ten days in advance.
Similar to Thailand’s regulatory framework, advertisements were required to include appropriate risk warnings. The rule change also included influencers and celebrity-paid promotions. Likewise, the United Kingdom’s Financial Conduct Authority (FCA) introduced stricter rules for the promotion of cryptocurrencies in 2023.
Promotional campaigns and advertisements have led to scams and allegations of fraud. In February, Korean influencers and celebrities were implicated in a fraud case for allegedly promoting blockchain sports platform Winnerz without disclosure.
The most prominent crypto advertising scandal concerns the EthereumMax (EMAX) promotional campaign. In 2022, major celebrities and athletes promoted the project on their social media platforms, without it being disclosed. Most notably, reality TV star and socialite Kim Kardashian was paid $250,000 to promote EMAX to her more than 320 million followers.
The US regulator accused the TV star of “violating the anti-promotion provisions of the federal securities laws”, resulting in a fine of $1.2 million. Additionally, the socialite agreed to stop promoting crypto for three years and cooperate with the SEC investigation.
At the time of the incident, SEC Chairman Gary Gensler reminded exchanges that promotions must comply with the regulatory framework.
Total crypto market cap is at $2.24 trillion on the weekly chart. source: TOTAL on TradingView
Featured image from Unsplash.com, chart from TradingView.com
