With the Securities and Exchange Commission (SEC) is requesting input on proposed regulations, Thailand is getting closer to permitting locally listed spot Bitcoin and Ether exchange-traded funds (ETFs).
The proposed regulations would limit the initial phase’s permissible cryptocurrency assets to Bitcoin and Ether, and the ETFs would only be able to trade on the Stock Exchange of Thailand (SET). Additionally, the SEC is proposing updated regulations for foreign custodians of digital assets that support funds that make digital asset investments.
The regulator said it has released two consultation papers. The first contains draft rules for Thai crypto ETFs, while the second sets out proposed requirements for foreign digital asset custodians used by mutual and private funds.
Under the initial framework, asset managers would be able to launch passive ETFs tracking either Bitcoin (BTC) or Ether (ETH). Each ETF would follow a single crypto asset rather than a basket of digital currencies.
The proposed rules would require each fund to maintain average net exposure of at least 80% of its net asset value to the underlying crypto asset during each accounting year. This would ensure that the ETFs remain closely linked to the digital assets they are designed to track.
The SEC said the draft regulations follow an earlier consultation held in April. Most respondents supported the broader framework, but the regulator received feedback on custody arrangements and has revised its approach accordingly.
For the initial phase, Thai crypto ETFs would primarily have to use digital asset custodians based in Thailand. However, the SEC said it could allow qualified foreign custodians when necessary and appropriate, depending on prevailing circumstances.
The separate proposal covering foreign custodians would require these providers to be supervised by a regulator with appropriate legal powers. They would also need to follow standards for regulation and protection of investors’ assets that the Thai SEC considers adequate.
The proposed framework would also allow Thai mutual and private funds to invest in locally domiciled crypto ETFs, alongside foreign crypto ETFs that they are already permitted to access, subject to existing investment limits.
Thailand would initially keep some products off the table. The SEC does not propose allowing alternative products linked to foreign crypto ETFs, including depositary receipts that track such products.
The latest move is part of Thailand’s broader ambition to establish itself as a digital asset hub for institutional investors. The SEC will accept public comments on both consultation papers until September 20. The final rules could determine how quickly Thailand’s regulated crypto ETF market takes shape.
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