Thailand's Securities and Exchange Commission (SEC) has proposed a new set of draft regulations aimed at allowing mutual and private funds to invest in cryptocurrencies. The announcement, made on Wednesday, comes as part of the regulator’s ongoing effort to update its digital asset investment framework and cater to the growing interest in cryptocurrency in the country.
Currently open for public feedback, the proposal seeks to revise the investment criteria for mutual funds to include digital assets like crypto exchange-traded funds (ETFs) listed on U.S. exchanges and specific investment tokens. This move follows Thailand's position as one of the world’s most crypto-friendly nations, ranked 10th globally in terms of cryptocurrency adoption.
Key Points of the Proposal
The proposed regulations outline several key aspects for mutual and private funds investing in cryptocurrencies:
Crypto ETFs Inclusion:
The draft regulations would allow funds to invest in cryptocurrency ETFs listed on U.S. exchanges, offering exposure to digital assets without holding the underlying tokens.
Investment Tokens:
The SEC also plans to permit investment in specific tokens, subject to traditional securities investment limits such as a single entity, group, and concentration limits.
Unlimited Investment for Certain Investors:
For institutional investors and ultra-high-net-worth individuals with a higher risk tolerance, the proposed rules would allow unlimited investment in crypto ETFs.
Similar Ratios for Investment Tokens and Securities:
According to Anek Yooyuen, the SEC’s deputy secretary-general, investment tokens will be treated similarly to traditional securities like debt instruments, given the comparable risks and characteristics.
Regulatory Developments and Compliance
The Thai SEC's announcement also touches upon the management of funds investing in digital assets. The regulator plans to establish guidelines covering areas like asset custody, digital asset value calculation, information disclosure, and appropriate advertising practices.
In June 2024, Thailand approved its first crypto ETF, managed by One Asset Management (ONEAM), marking a significant step forward in the country’s regulatory approach to digital assets. This endorsement signaled the government's support for incorporating crypto products into the mainstream financial sector.
Looking Ahead: ICOs and Stricter Penalties
The Thai SEC is also considering additional measures to regulate the digital asset market. Among these are:
Outsourced Initial Coin Offering (ICO) Services:
The regulator is considering allowing authorized ICO portals to use third-party services for their operations, pending a public hearing.
Regulatory Sandbox for Private Companies:
Up to 10 private firms may be permitted to participate in a digital asset regulatory sandbox, testing crypto-to-Thai-baht exchanges.
Increased Penalties for Rule Violations:
Crypto firms violating SEC rules will face more stringent penalties, including fines of 1 million to 3 million baht and potential license revocation for serious offenses.
These initiatives aim to strengthen investor protection and ensure that companies comply with the established regulatory standards.
