By
Chimamanda U. Martha
April 26th, 2024
The Thailand SEC’s decision to embrace the crypto ETFs comes at the right time as Bitcoin price hits a new all-time high of $72,850, making it a good opportunity for Thai investors.
Thailand’s Securities and Exchange Commission (SEC) took a measured step towards the adoption of crypto on Monday by allowing asset management companies to invest in bitcoin exchange-traded funds (ETFs) listed on US exchanges for spot trading. However, only institutional investors or high-net-worth individuals may now access these funds.
Under prior rules, regulations for investment by asset management firms did not cover digital assets ETFs, and under the SEC Act, only securities can be traded by an asset manager.
However, The United States Securities Regulator’s approval of spot Bitcoin ETFs in January made the SEC acknowledge them as securities rather than crypto assets under Thai regulations. The SEC secretary-general Pornanong Budsaratragoon says the regulator will allow only sophisticated investors to access Bitcoin through ETPs, as it is seen as highly speculative.
“Asset management firms asked the SEC for them to have exposure in digital assets, especially Bitcoin and spot Bitcoin ETFs,but we need to consider carefully whether to allow asset management firms to invest in digital assets directly due to the high risk,” said Ms Pornanong.
Thailand’s Previous Stance on Bitcoin ETFs
In January 2024, the Thai SEC said it would not permit asset management companies to create spot bitcoin ETFs, until now the regulator insisted that people should only invest in digital assets through authorized local exchanges.
“The SEC has been following these developments closely but we do not have a policy to allow spot Bitcoin ETFs to be established in Thailand for the time being,” the regulator said.
Lately, the SEC has made moves towards being crypto friendly by easing investment restrictions for retail investors on certain asset-backed tokens. Also, it is now requiring custodial wallet management by dedicated entities as part of its more liberal approach to cryptocurrency regulation.
Balancing Innovation and Investor Protection
The SEC’s decision is balanced, noting the possibility of cryptocurrencies but focusing on investor protection. The regulator seeks to reduce risks that come with the volatile digital asset market by limiting institutional and ultra-wealthy individuals.
However, retail investors may not get any exposure to spot Bitcoin ETFs under the new rules. In Thailand, retail crypto trading is still popular although it is limited. The government banned digital assets for payments in March 2022, while the SEC prohibited use of cryptos for lending and investment during July 2023.
Pornanong said that the rules governing investment by asset management firms do not apply to digital asset EFTs at present, but we had to alter the structure so that it can be used as a means of unlocking such investments through alternative investment funds.
Bitcoin All-Time High Spurs Investment Timing
The Thailand SEC’s decision to embrace the crypto ETFs comes at the right time as Bitcoin price hits a new all-time high of $72,850, making it a good opportunity for Thai investors. As of March 12, Bitcoin is above $72,000, which further increased the interest in this growing asset class.
The SEC board has also approved proposals by the Stock Exchange of Thailand (SET) to upgrade the supervisory regime and listing rules in the stock market to provide better protection for investors and lead to the longer-term growth of the Thai market by strengthening the risk management of stocks and controlling the volatility of stock prices.
Thailand’s SEC has welcomed digital assets into its financial ecosystem, a move that will encourage other countries to follow suit. In this way, it is not only a reflection of how investment has been changing but also a signal that virtual currencies may transform the world’s economy.
