Thai SEC Proposes Crypto Investment Rules for Mutual and Private Funds

Highlights:

• Thailand’s SEC proposes new regulations allowing mutual funds to invest in digital assets.
• Funds can now invest in U.S. crypto ETFs, enhancing investment diversification opportunities.
• SEC plans to impose stricter penalties for crypto firms violating regulations and rules.

Thailand’s Securities and Exchange Commission (SEC) has proposed new regulations that permit mutual funds and private funds to invest in digital assets. This move seeks to align with international developments and address the increasing interest from institutional investors. The proposed principle, announced on Oct. 9, is currently seeking public feedback on the revised standards for funds investing in digital assets.

JUST IN: THAI SEC PROPOSES NEW RULES TO ALLOW MUTUAL FUNDS AND PRIVATE FUNDS TO INVEST IN DIGITAL ASSETS

— BSCN Headlines (@BSCNheadlines) October 10, 2024

The regulator stated that the funds can invest in crypto exchange-traded funds (ETFs) on U.S. stock exchanges. This decision enables securities and asset management companies to provide crypto-related products aimed at large investors. This initiative aims to give investors more opportunities to diversify their portfolios under professional management.

SEC Deputy Secretary-General Anek Yooyuen explained that investment tokens will be treated like traditional securities, such as stocks and bonds, because of their similar characteristics and risks. The SEC plans to update the criteria to support the creation and management of funds that focus on digital assets.

Yooyuen stated:

“Relevant criteria will be revised to support the establishment and management of funds investing in digital assets, such as asset custody, digital asset value calculation, information disclosure and appropriate advertising.”

Cryptocurrency ETFs have gained significant attention recently, particularly in the US. With Bitcoin and Ethereum ETFs already approved this year, Thailand is now looking to follow suit. The SEC believes it’s the right moment to offer local investors an opportunity to diversify their portfolios into digital assets, ensuring they do so with professional oversight.

Thailand approved its first cryptocurrency ETF, issued by One Asset Management (ONEAM), in June. The Thai SEC’s endorsement of ONEAM’s Bitcoin ETF marks a significant milestone in the country’s evolving digital asset regulations.

According to Bangkok Post, the Thai SEC approved local asset management company One Asset Management to launch Thailand's first Bitcoin ETF, which is limited to wealthy and institutional investors. The fund's policy is to invest in 11 leading global funds and has passed…

— Wu Blockchain (@WuBlockchain) June 4, 2024

Managing the Risks of Crypto

Cryptocurrency can be unpredictable, but the SEC aims to enhance investor safety through strategic measures. They plan to categorize digital assets into groups, distinguishing between high-risk assets like Bitcoin and more stable ones like Tether.

To mitigate excessive risk, the SEC will impose limits on investments. Retail mutual funds will be allowed to invest only 15% of their total funds in crypto. However, institutional investors and ultra-wealthy individuals will have greater flexibility. While there will be no caps on their investments, they will still be required to diversify their portfolios to minimize risks. 

Thai SEC Considers ICO and Harsher Penalties for Crypto Violations

Alongside these updates, the SEC intends to revise the rules for managing crypto asset funds, addressing areas like asset custody, valuation, information disclosure, and advertising practices. The regulator also plans to authorize initial coin offering (ICO) portals, permitting outsourced companies to assist with token fundraising and investment project design. “This measure was endorsed by the SEC and a public hearing is needed before it can be implemented,” Yooyuen added.

Additionally, the Thai SEC plans to permit 10 private companies to conduct trials for exchanging cryptocurrencies for Thai baht under the digital asset regulatory sandbox initiative. Moreover, crypto firms violating SEC regulations will face strict consequences. The regulator intends to impose higher penalties on offending companies, with the possibility of revoking their licenses.

Securities firms issuing improper trading orders could face fines ranging from 1 million to 3 million baht. Investors engaging in stock manipulation may also be subject to both civil and criminal penalties, according to the report.

Thailand’s Strong Position in Crypto Adoption 

Thailand has been a proactive player in the cryptocurrency sector for years. According to Chainalysis’ “2023 Global Cryptocurrency Adoption Index,” Thailand ranks 10th in civilian adoption. Globally, Thailand is among the countries with the highest cryptocurrency ownership, as noted in the Global 2022 Digital Overview Report.

Additionally, Statista data shows that as of January 11, 2024, Thailand had 13.02 million crypto users, representing 18.1% of the population. The number of users is expected to grow to 17.67 million by 2028, marking ten years of continuous growth.