TL;DR
- Thailand has implemented new regulations allowing Bitcoin and Ethereum ETFs to be established and traded on its stock exchange.
- The funds must follow passive investment strategies, maintain a minimum average net exposure of 80%, and hold their underlying cryptocurrencies with regulated custodians.
- Investors must acknowledge the risks associated with these products and cannot use broker-provided margin loans to purchase them.
Thailand has implemented its new regulatory framework for Bitcoin and Ethereum exchange-traded funds (ETFs), allowing local asset managers to develop these products and trade them on the Stock Exchange of Thailand (SET).
Thailand’s Securities and Exchange Commission (SEC) introduced 11 regulatory provisions covering fund structures, digital asset custody, intermediary obligations, and investor protection measures.
During the initial phase, Bitcoin and Ethereum will be the only eligible cryptocurrencies. The regulator may add other assets later after assessing their liquidity, market acceptance, security, and risks to investors.
Thailand Establishes Investment and Custody Requirements for ETFs
The new ETFs must follow passive investment strategies and track the performance of a single approved cryptocurrency.
They must also maintain an average net exposure of at least 80% of their net asset value during each accounting year.
The funds must be listed and traded exclusively on the Stock Exchange of Thailand (SET). Thai mutual funds and private funds will also be permitted to invest in these ETFs, provided they comply with their investment limits.
The regulations require the underlying Bitcoin or Ethereum to be held by entities authorized and supervised by the SEC.
Asset managers must have adequate personnel, systems, and service providers. If they outsource digital asset investment management, they must appoint managers holding the appropriate licenses.
Investors Cannot Finance Purchases Through Margin Loans
Thailand’s regulatory framework introduces specific requirements for intermediaries offering these products.
Before trading, investors must receive information about the risks of cryptocurrency ETFs and confirm that they understand the products’ characteristics and potential losses.
Securities firms will also be prohibited from providing margin loans to purchase these funds, a restriction intended to prevent investors from increasing their exposure through borrowed money.
During the initial phase, Thailand will also prohibit the domestic issuance of depositary receipts linked to foreign cryptocurrency ETFs and restrict access to these international products for certain clients.
Although the regulations now allow local Bitcoin and Ethereum ETFs to be developed, no specific fund or trading launch date has been announced yet.
Interested asset managers must publish their prospectuses, appoint custodians and other service providers, and complete the SET’s authorization and listing procedures before offering their products to investors.
