Thailand’s Securities and Exchange Commission (SEC) has advanced its regulatory framework for locally listed spot Bitcoin and Ether exchange-traded funds from proposed principles to draft regulations. The regulator announced that it is seeking public feedback on two consultation papers, with the comment period open until Sept. 20.
One of the consultation papers contains draft regulations for Thai crypto ETFs, while the second proposes principles governing the qualifications of foreign digital asset custodians engaged by mutual and private funds investing in digital assets. The initiative forms part of Thailand's broader ambition to become a global digital asset hub for institutional investors.
Trading and Investment Rules on the SET
Under the proposed rules, Bitcoin and Ether ETFs would trade exclusively on the Stock Exchange of Thailand (SET). During the initial stage, asset managers would be permitted to establish passive ETFs tracking Bitcoin or Ether, which are designated as the only two eligible crypto assets.
Each ETF would be required to maintain an average net exposure of at least 80% of its net asset value to the respective crypto asset over each accounting year. Furthermore, the proposed rules would allow mutual funds and private funds to invest in these Thai-domiciled crypto ETFs, as well as foreign crypto ETFs they are already permitted to invest in, subject to existing investment limits. However, alternative products tied to foreign crypto ETFs, such as depositary receipts tracking them, would not be allowed during the initial phase.
Revisions to Digital Asset Custody Proposals
The draft regulations follow an April consultation on the framework's broader principles. While most respondents supported the framework, feedback regarding custody arrangements prompted the regulator to revise its approach.
Under the revised guidelines, crypto ETFs will primarily be required to use onshore digital asset custodians during the initial phase. The SEC stated that it may permit the use of qualified foreign digital asset custodians when deemed necessary and appropriate based on prevailing circumstances.
For the separate custodian proposal concerning mutual and private funds, foreign providers would need to be supervised by a regulatory authority with legal powers and operate under regulatory and investor asset protection standards deemed adequate by the Thai SEC.
