DeFi Transactions Pose Higher Risks, Thai SEC Cautions Investors
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Thailand Security and Exchange Commission (SEC) warns investors within the state about the risks that DeFi transactions pose. SEC claimed that DeFi’s ecosystem, especially lending and debit-taking firms, may not include necessary parameters in their mechanisms to ensure the prevention of rug-pull and overleveraged collateral.
While cryptocurrency gained prominent growth in recent years, it also alerted global security watchdogs to supervise as the crypto-space has become the favorite choice of cyber criminals and the likes of Terra collapse stunned the world’s crypto enthusiasts.
In line with the SEC’s Wednesday statements, the Officials termed the DeFi transactions risky, saying these firms may lack mechanisms that ensure the system’s efficiency by applying terms and conditions in the smart contracts. Officials added;
“Therefore investors are advised to study any DeFi programme before joining… as deposit taking and lending services are not regulated by the financial and capital market regulators in Thailand.”
In Decentralized Finance (DeFi), financial decisions are made by the applied mechanism over meeting the specific terms and conditions. Therefore, it does not include any third-party counter to supervise the system.