Thailand moves closer to Bitcoin, Ether ETFs with draft rules

Thailand’s SEC opened consultations on local Bitcoin and Ether ETF rules and qualification standards for foreign digital asset custodians.

Thailand’s Securities and Exchange Commission (SEC) has advanced its framework for locally listed spot Bitcoin and Ether exchange-traded funds (ETFs) from proposed principles to draft regulations while revising its approach to foreign digital asset custodians.

The regulator said Monday it is seeking feedback on two consultation papers. One contains draft regulations for Thai crypto ETFs, while the other proposes principles governing the qualifications of foreign digital asset custodians engaged by mutual and private funds investing in digital assets.

During the initial stage, asset managers could establish passive ETFs tracking Bitcoin (BTC) or Ether (ETH), the only two eligible crypto assets.

The draft regulations follow an April consultation on the framework’s broader principles. The SEC said most respondents supported the framework but provided feedback on custody arrangements, prompting the regulator to revise its proposed approach.

The framework forms part of Thailand’s ambition to become a global digital asset hub for institutions.

Bitcoin and Ether ETFs would trade on Thai stock exchange

Under the proposed rules, Bitcoin and Ether ETFs would trade exclusively on the Stock Exchange of Thailand (SET). Each ETF would track a single crypto asset and would need to maintain average net exposure of at least 80% of its net asset value to that asset over each accounting year.

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The proposed rules would also allow mutual funds and private funds to invest in Thai-domiciled crypto ETFs, alongside foreign crypto ETFs in which they are already permitted to invest, subject to existing investment limits.

During the initial phase, however, the regulator would not allow alternative products tied to foreign crypto ETFs, including depositary receipts tracking them.

Thailand revises crypto custody proposal

The revised approach would retain onshore digital asset custodians as the primary providers for crypto ETFs during 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,” the SEC said.

Under the separate custodian proposal, foreign providers serving mutual and private funds investing in digital assets would need to be supervised by a regulatory authority with legal powers. They would also have to operate under regulatory and investor asset protection standards that the Thai SEC considers adequate.

The SEC will accept public comments on both consultation papers until Sept. 20.

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