A small toy figure is seen on representations of the Bitcoin virtual currency in this illustration picture on Dec 26, 2017. (Reuters photo)
The Securities and Exchange Commission (SEC) has said Thailand’s first bitcoin futures trading service offered by a securities company is not against rules but urged investors to apply caution due to high risks.
The SEC issued the statement on Monday after receiving several enquiries about the trading. It did not name the broker but there were reports earlier that Phillip Securities (Thailand) Plc was to first to offer the service, which began late last year.
The SEC said the derivatives are traded on the Chicago Mercantile Exchange and CBOE Futures Exchange, which are under the supervision of the US Commodity Futures Trading Commission.
“The Thai securities company can offer the product since the markets are under the supervision of the International Organization of Securities Commissions (IOSCO), with which Thailand has an agreement to exchange data,” the statement said.
Since the product is already supervised by qualified regulators, the major concern for Thai traders is not fraud or money laundering. At issue is the extremely high risk due to the high volatility of the cryptocurrency, which is the underlying asset, and the leverage of the product, which could generate higher or lower profits or losses than the underlying product does.
The SEC said it had instructed the broker to be cautious when selling the service and make sure customers understand and are ready accept the risk.
Also on Monday, the Finance Ministry urged investors to apply caution when investing in bitcoin, especially with companies claiming to do so for them.
Bitcoin traders who persuade others to invest with them might have been violating the law on public fraud, according to the ministry.
Anyone who advertises to a group of 10 people or more he can give returns at rates higher than the maximum offered by financial institutions might be committing public fraud if he knows or should know that he would use the money from some investors to pay others as returns, or is aware he cannot possibly operate legitimately to generate such returns.
Punishments are jail terms of 5-10 years and fines of 500,000 to 1 million baht and not more than 10,000 baht a day throughout the violating period.
The ministry urges investors to do their homework so they can determine whether the trade can really generate such returns or is a Ponzi scheme where money from new members are used to pay existing ones.
The ministry also reiterated the Bank of Thailand did not endorse bitcoin as a currency. As such, it can be rejected by vendors and users are not protected when fraud and lawsuits are involved.