Thailand has moved its planned spot Bitcoin and Ether exchange-traded fund framework into the draft regulation stage, setting an 80% minimum exposure requirement while keeping domestic digital asset custodians as the primary custody option.
Draft Regulations Open for Public Comment
Thailand's Securities and Exchange Commission said it had opened two public consultations covering draft rules for locally established crypto ETFs and revised qualification standards for foreign digital asset custodians serving mutual and private funds. The latest proposal advances a framework first put out for public comment in April, when the regulator sought views on the main principles governing crypto ETFs, investment management and custody. Most respondents supported the plan, according to the SEC. Public comments will remain open until Sept. 20.
80% Minimum Exposure Requirement
Under the draft rules, locally established crypto ETFs would trade exclusively on the Stock Exchange of Thailand, giving investors exposure to Bitcoin or Ether through securities accounts without requiring them to directly manage cryptocurrency wallets. Each ETF would have to maintain average net exposure of at least 80% of its net asset value to its underlying cryptocurrency over each accounting year.
During the first stage, asset management companies would be allowed to establish passive ETFs tracking only Bitcoin or Ether. Each fund would follow a single cryptocurrency, limiting the initial framework to the two assets the regulator currently considers sufficiently liquid and widely accepted. Fund managers would also have to demonstrate sufficient operational readiness, including qualified personnel, appropriate systems, and access to service providers.
Domestic Custodians Remain Primary
Custody emerged as one of the main issues during the SEC's April consultation, leading the regulator to adjust its initial proposal while maintaining licensed Thai providers as the default option. Under the revised approach, crypto ETFs will continue to be primarily required to use onshore digital asset custodians, while the SEC may permit the use of qualified foreign custodians when necessary and appropriate.
The revised model gives the SEC discretion to approve foreign custodians without removing the preference for domestic providers. For mutual funds and private funds investing in digital assets, foreign custodians would have to operate under the supervision of a regulator with legal authority over their activities.
Expanding Investment Options
The rules would also expand investment options available to existing mutual funds and private funds. Such funds can already invest in foreign crypto ETFs under applicable investment limits, and the amendments would allow them to invest in Thai-domiciled crypto ETFs under the same investment control framework. Alternative instruments referencing overseas crypto ETFs, including depositary receipts linked to foreign crypto ETFs, would not initially be permitted.
The ETF framework is developing alongside changes to Thailand's derivatives market. In February, the government recognized cryptocurrencies as underlying assets under the Derivatives Trading Act, allowing assets such as Bitcoin to serve as the basis for regulated futures and options contracts. The framework also called for cooperation with the Thailand Futures Exchange on crypto-linked products.
Building on Earlier Crypto Product Approvals
Thailand's work on locally traded crypto ETFs follows an earlier investment product approved for a narrower investor group. In June 2024, regulators approved the country's first spot Bitcoin ETF fund for institutional and ultra-high-net-worth investors. The latest draft rules would make similar products available to retail investors through the Stock Exchange of Thailand, broadening access to cryptocurrency exposure through regulated securities.