Thailand SEC Moves Closer to Bitcoin & Ether ETFs: Draft Rules Set the Stage for a Digital Asset Hub

Thailand’s Securities and Exchange Commission has opened consultations on draft rules that would allow locally listed Bitcoin and Ether ETFs to trade exclusively on the Stock Exchange of Thailand, marking a decisive step toward positioning the country as a global digital‑asset hub.

Regulatory Journey: From Principles to Drafts

■SEC has published two consultation papers outlining regulatory frameworks for Bitcoin and Ether ETFs.

■In the initial phase, asset managers can launch passive ETFs tracking a single crypto asset, limited to BTC and ETH.

■Each ETF must maintain at least 80 % of its net asset value in the corresponding crypto asset over each fiscal year.

Custody Conundrum: Onshore vs Foreign

■Initially, domestic digital asset custodians will be the primary providers for ETFs.

■The SEC may allow foreign custodians if deemed necessary, provided they meet regulatory and investor protection standards.

■Foreign providers must be supervised by an authority with legal powers and operate under standards the Thai SEC deems adequate.

A New Window for Institutional Investors

■Mutual and private funds can invest in Thai-domiciled ETFs, while also accessing foreign ETFs, though alternative products (e.g., depositary receipts) remain restricted.

■These regulations aim to give institutional investors a more controlled entry into digital assets.

Market Mechanics: Net Exposure and Trading Limits

■Each ETF will be tied to a single crypto asset and must hold at least 80 % of its net asset value in that asset.

■Trades will occur exclusively on the Stock Exchange of Thailand (SET), easing local investor access.

Global Impact: Contributing to the Digital Asset Ecosystem

■Thailand’s move paves the way for similar regulatory initiatives in the US, EU, and Asia.

■The ETF infrastructure and onshore custody focus could unlock new opportunities for global investors.

Deniz Arel: Thailand SEC’s draft regulations represent a significant milestone in standardizing and securing the crypto market. Prioritizing onshore custodians enhances investor protection, while incorporating foreign players boosts competition in global markets. This approach can serve as a blueprint for emerging economies and accelerate institutional adoption of crypto assets.