Thailand Issues Draft Regulations for Bitcoin and Ethereum ETFs
The Securities and Exchange Commission of Thailand has launched public consultations regarding regulations for domestic Bitcoin and Ethereum ETFs, along with standards for international digital asset custody services.
The Securities and Exchange Commission (SEC) of Thailand has progressed its regulatory framework for spot Bitcoin and Ether exchange-traded funds (ETFs) listed domestically, transitioning from proposed principles to concrete draft regulations, while simultaneously updating its stance on international digital asset custody providers.
On Monday, the regulatory body announced it is soliciting public input on two separate consultation papers. The first paper outlines draft regulations specifically designed for Thai cryptocurrency ETFs, whereas the second paper puts forward principles that would govern the qualification requirements for foreign digital asset custodians utilized by mutual and private funds that invest in digital assets.
In the beginning phase, fund managers would be permitted to create passive ETFs that track Bitcoin (BTC) or Ether (ETH), which represent the sole two permissible crypto assets under the framework.
These draft regulations come after an April consultation focused on the framework's overarching principles. According to the SEC, the majority of respondents expressed support for the framework while offering feedback regarding custody arrangements, which led the regulator to modify its initially proposed approach.
This framework represents a component of Thailand's broader ambition to establish itself as a leading global digital asset hub catering to institutional investors.
Bitcoin and Ether ETFs would trade on Thai stock exchange
According to the proposed regulations, Bitcoin and Ether ETFs would be traded solely on the Stock Exchange of Thailand (SET). Each individual ETF would be designed to track one single crypto asset and would be required to sustain an average net exposure of no less than 80% of its net asset value to that particular asset throughout each accounting year.
The proposed regulations would additionally permit mutual funds and private funds to make investments in crypto ETFs domiciled in Thailand, in addition to foreign crypto ETFs in which they already have permission to invest, all subject to current investment limitations.
During the opening phase, though, the regulator has stated it would not permit alternative products connected to foreign crypto ETFs, which includes depositary receipts that track them.
Thailand revises crypto custody proposal
The updated approach would maintain domestic digital asset custodians as the principal service providers for crypto ETFs throughout the initial phase.
Under the revised approach, crypto ETFs will continue to be primarily required to use onshore DA [digital asset] custodians, while the SEC may permit the use of qualified foreign DA custodians when necessary and appropriate in light of prevailing circumstances.
Thailand SEC
According to the separate custodian proposal, foreign providers that serve mutual and private funds making investments in digital assets would be required to operate under the supervision of a regulatory authority possessing legal powers. These providers would additionally need to function under regulatory frameworks and investor asset protection standards that the Thai SEC deems adequate.
Public comments on both consultation papers will be accepted by the SEC through Sept. 20.