Thailand’s Securities and Exchange Commission (SEC) has officially advanced its regulatory framework for spot digital asset exchange-traded funds (ETFs) from high-level principles to formal draft regulations. The regulator released two public consultation papers seeking industry feedback on the proposed rules governing local crypto ETFs as well as revised qualification standards for foreign digital asset custodians. The move represents a key step in Thailand’s broader strategy to establish itself as a regulated institutional hub for digital assets in Southeast Asia.
Under the initial phase of the proposed framework, asset managers will be permitted to launch passive, single-asset spot ETFs tracking either Bitcoin (BTC) or Ether (ETH). The SEC confirmed that these two cryptocurrencies remain the only eligible underlying assets for the primary rollout.
Framework Specifics and SET Listing Requirements
The draft regulations establish clear operational parameters for crypto ETF construction and exchange trading.
All Thai-domiciled Bitcoin and Ether ETFs must be listed and traded exclusively on the Stock Exchange of Thailand (SET).
- Funds must maintain an average net exposure of at least 80% of their Net Asset Value (NAV) to the designated underlying cryptocurrency over each accounting year.
- Local mutual funds and private funds will be authorized to allocate capital to Thai-domiciled crypto ETFs under existing institutional investment limits.
- In the initial rollout, alternative structured products tied to foreign crypto ETFs, such as Depositary Receipts (DRs), will remain prohibited.
The current draft follows an initial consultation held in April, where market participants expressed strong support for local spot products while requesting greater clarity regarding digital asset custody requirements.
Revised Onshore and Foreign Custodial Mandates
In response to industry feedback, the Thai SEC modified its proposed custody framework. The updated rules mandate that local crypto ETFs primarily utilize licensed domestic digital asset custodians during the launch phase. However, the regulator introduced flexibility to permit qualified foreign digital asset custodians under specific conditions where local capacity or operational necessity dictates.
To qualify as a foreign custodian for local funds, offshore entities must operate under direct supervision by a recognized regulatory body possessing legal enforcement powers. Furthermore, the foreign custodian’s regulatory framework and investor protection standards must be deemed equivalent to Thai SEC requirements.
The public consultation period for both draft regulation papers remains open through September 20, after which the regulator will finalize the operational guidelines.
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