The Securities and Exchange Commission of Thailand has warned against DeFi transactions and alerted investors within the state about the potential risks these platforms possess.
The SEC says that the DeFi ecosystem, which is made up of companies that offer debiting and money lending services, does not have the necessary security measures in place to protect against overleveraged collateral and “rug pulling.”
The cryptocurrency industry has recently gained popularity but has also been cited as a potential threat. Security watchdogs all over the world are paying more attention to cryptocurrency exchanges because hackers and cybercriminals are constantly going after them.
Thai SEC opposes DeFi platform transactions
On Wednesday, the Securities and Exchange Commission of Thailand released an official statement against cryptocurrency transactions through the DeFi network. The officials advise the public to understand and know the details of a DeFi platform before making any transactions on them.
In DeFi (Decentralized Finance), the decision regarding finances is made through the application of a mechanism with specific terms and conditions. Therefore, no third-party supervisor is available to check against any of the system’s loopholes.
The SEC also said that any transaction done on the DeFi platforms comes with risks in the services and products that are hard for people who don’t know much about technology to understand.
Representatives of Thailand’s official watchdog also said that cryptocurrencies could cause more collateral damage than expected and investors might not get the ROI (Return on Investment) they were expecting if they were vulnerable to transaction risks and hacking.