Thailand's Securities and Exchange Commission (SEC) announced 11 notifications on October 8 governing the establishment and operation of crypto-asset exchange-traded funds (ETFs). The rules take effect on October 16, and the initial eligible assets are Bitcoin and Ether.
An ETF must be managed as a passive fund tracking the price of one crypto asset. Its average net exposure to that crypto asset over each accounting year must remain at least 80% of net asset value (NAV). Crypto-asset ETFs in Thailand may be listed and traded only on the Stock Exchange of Thailand (SET). Before trading, investors must confirm that they understand the product's features and risks, and securities companies may not provide margin loans to finance ETF purchases. Crypto assets must be held by a licensed digital-asset custodian supervised by Thailand's SEC.
Asset managers may outsource digital-asset management only to licensed digital-asset fund managers. Digital-asset businesses such as custodians may apply to register as mutual fund supervisors for crypto-asset ETFs if they meet financial, staffing and operational-system requirements. Even if the mutual fund supervisor appoints a separate sub-custodian, the crypto assets must be held by a licensed custodian.
Mutual funds and private funds that were already allowed to invest in overseas crypto-asset ETFs will also be able to invest in Thai ETFs within their existing investment limits. At the initial stage, however, alternative products such as depositary receipts (DRs) referencing overseas crypto-asset ETFs will not be permitted. Securities companies also may not intermediate overseas crypto-asset ETF investments for clients other than institutional investors and ultra-high-net-worth investors.
October 16 is the effective date of the rules; the announcement did not specify when the first ETF would be listed or which asset managers would participate.