Thailand's SEC opens bitcoin and ether ETFs to local mutual and private funds

Thailand’s Securities and Exchange Commission has cleared Thai mutual funds and private funds to buy bitcoin and ether ETFs listed on the Stock Exchange of Thailand.

The rules take effect October 16.

The SEC’s 11 notifications bar depositary receipts tied to overseas products

Until now, the funds could only invest in crypto ETFs issued abroad. The SEC said current investment limits remain in place.

The SEC issued the framework on October 8, via 11 regulatory notifications. For now, only bitcoin and ether are eligible.

Any future additions will be contingent on liquidity, market acceptance, blockchain network security and investor protection, the regulator said.

In the initial stage, depositary receipts related to international crypto ETFs are not permitted.

Brokers still can’t facilitate foreign crypto ETF investments by clients outside the institutional and ultra-high-net-worth cohorts.

Nirun Fuwattananukul, CEO of Binance Thailand, said that buying via an existing brokerage account removes a hurdle for investors wary of exchange accounts and wallets. Before any launch, issuers still require fund registration, product approval, a SET listing and custody, he said.

October 16 is the date the framework takes effect, not a confirmed first trading day.

A single coin must make up at least 80% of net asset value

Each fund is a passive vehicle that follows the price of a single coin. It must hold at least 80% of its net asset value in that coin, averaged over each accounting year.

Custody goes to the SEC-regulated digital asset custodians. Delegated custody still must take place with a licensed custodian and the SEC retained the option to permit qualified foreign custodians when necessary.

The funds only trade on the SET. Securities firms cannot lend to customers on margin to buy the funds.

Each buyer gets product disclosures first and must acknowledge the risks. Companies also need to caution against overexposure to digital assets.

Asset managers can only outsource investment management to licensed digital asset fund managers. Qualified digital asset firms can be fund supervisors if they satisfy standards on finances, staff and operations.

The SEC sought public comment on core principles in April and May and draft rules in August and September. Responses ran mostly in favor, the SEC said.

Cryptopolitan reported in August that the draft already incorporated the two-coin limit and 80% floor. Crypto ETFs were approved in principle, said SEC deputy secretary-general Jomkwan Kongsakul in January.

In June 2024, Thailand approved its first spot bitcoin ETF, but only for institutional investors. Crypto gains also face a 0% capital gains rate from January 1, 2025, through the end of 2029.

With 20% versus 13% in the U.S., Thailand is said to have the most crypto users per capita in the world.

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