Thailand sets Oct. 16 start for bitcoin, ether ETF rules

Thailand’s Securities and Exchange Commission issued 11 notifications on Oct. 8 for crypto exchange-traded funds, with rules taking effect Oct. 16 and bitcoin and ether eligible at the outset. The framework sets conditions for funds to trade on the Stock Exchange of Thailand, according to the SEC’s announcement of the new rules.

• 11 notifications take effect Oct. 16.
• Bitcoin and ether are the only eligible assets in the initial phase.
• Funds must maintain average exposure of at least 80% of net asset value to one crypto asset.
• Crypto ETFs must trade on the Stock Exchange of Thailand.

What will the funds be required to do?

Crypto ETFs must be passive funds that seek to track the price of the asset they hold. The SEC’s rules require each fund to maintain average net exposure to a single crypto asset of at least 80% of its net asset value over each accounting year.

Funds must use digital asset custodians licensed by the SEC to safeguard their holdings. The regulator said it will select eligible assets based on liquidity, broad market acceptance, network security and investor protection; bitcoin and ether qualify in the first phase.

What protections apply to investors?

Investors will have to acknowledge that they understand a crypto ETF’s risks before trading. Securities firms must provide investor education, and they cannot offer margin loans to finance ETF purchases, the SEC said.

Asset managers must disclose the fund’s structure, investment method, service providers and specific risks. The SEC also requires firms offering these products to encourage suitable asset allocation and decisions that match investors’ risk tolerance.

The rules also limit where the funds can trade: crypto ETFs will be listed and traded exclusively on the Stock Exchange of Thailand. The Block’s report on the framework notes the rules set an effective date, while the SEC’s announcement describes the conditions funds must meet.

Who can manage or oversee a crypto ETF?

An asset management company can outsource digital asset investment management only to a licensed digital asset fund manager. The SEC also allows qualified digital asset businesses, including custodians, to apply to act as mutual fund supervisors for crypto ETFs if they meet requirements for staffing, systems and financial standing.

Mutual funds and private funds in Thailand will be allowed to invest in locally listed crypto ETFs, subject to existing investment limits. During the initial phase, the SEC will not allow depositary receipts tied to foreign crypto ETFs or securities firms to arrange foreign crypto ETF investments for clients outside institutional and ultra-high-net-worth categories.

Sources and documents

• announcement of the new rules — sec.or.th
• report on the framework — theblock.co