Thai SEC Proposes Crypto Investment Rules for Funds

The Thai Securities and Exchange Commission (SEC) is taking a progressive step towards integrating digital assets into traditional investment portfolios by proposing new regulations that would allow mutual and private funds to engage in cryptocurrency investments. This initiative aims to modernize Thailand’s investment landscape and cater to the growing interest from institutional investors.

Overview of the Proposed Regulations

Released this Wednesday, the draft proposal outlines revisions that would enable securities companies and asset management firms to offer crypto-related products, including exchange-traded funds (ETFs), to large-scale investors. This move is influenced by the increasing global traction of digital assets and the successful launch of Bitcoin and Ethereum ETFs in the United States earlier this year.

Aligning with Global Trends

The Thai SEC’s proposal seeks to align local regulations with international standards, acknowledging that while Thai investors currently have access to foreign crypto ETFs, domestic regulations have lagged behind. The existing framework, established in 2015, does not reflect the recent advancements in digital asset investing. The new rules aim to bridge this gap, enhancing the competitiveness of Thailand’s financial markets.

Risk Management and Investment Caps

A significant aspect of the proposal is the differentiation between high-risk digital assets like Bitcoin and more stable options such as Tether (USDT). The SEC emphasizes the importance of fund managers exercising fiduciary duty to select suitable investment channels and manage risks effectively.

For retail mutual funds, the draft suggests a cap of 15% on crypto investments to protect individual investors. However, there would be no upper limit for institutional and ultra-high-net-worth investors, provided they implement adequate risk diversification strategies.

Operational Guidelines and Public Feedback

The proposal also specifies operational guidelines for the temporary holding of digital assets. For instance, funds might hold cryptocurrencies such as Bitcoin or Ethereum for up to five business days for trading purposes, ensuring liquidity and operational flexibility.

The Thai SEC is currently seeking public feedback on these regulatory adjustments, with the comment period open until November 8. The final regulations are anticipated to be established next year, marking a significant update to Thailand’s digital asset investment framework.

The Thai SEC’s proactive approach in revising investment regulations to include digital assets reflects a broader acceptance of cryptocurrencies as legitimate financial instruments. By updating these rules, Thailand not only aims to safeguard investors but also to foster a more inclusive and diversified investment environment. This could potentially attract more institutional investors to the Thai market, bolstering its growth and aligning it with global financial trends.