Thailand's Securities and Exchange Commission has moved its planned spot Bitcoin and Ether exchange-traded fund framework into the draft regulation stage, requiring locally listed ETFs to maintain at least 80% exposure to their underlying crypto assets. The regulator has opened two public consultations covering draft rules for locally established crypto ETFs and revised qualification standards for foreign digital asset custodians serving mutual and private funds. The latest proposal builds upon a framework first put out for public comment in April, when the regulator sought views on the main principles governing crypto ETFs, investment management and custody. Most respondents supported the plan, although feedback on custody arrangements led officials to revise part of the original approach.
Under the draft rules, locally established crypto ETFs would trade exclusively on the Stock Exchange of Thailand, giving investors exposure to Bitcoin or Ether through securities accounts without requiring direct management of cryptocurrency wallets. Each ETF would have to maintain average net exposure of at least 80% of its net asset value to its underlying cryptocurrency over each accounting year. Fund managers would also need to demonstrate sufficient operational readiness, including qualified personnel, appropriate systems, and access to service providers capable of handling the products. During the first stage, asset management companies would be allowed to establish passive ETFs tracking only Bitcoin or Ether, with each fund following a single cryptocurrency to limit the initial framework to the two assets. This framework aims to provide investors easier access to crypto exposure while addressing operational risks like wallet security and hacking.
Custody emerged as a main issue during the April consultation, leading the SEC to adjust its initial proposal while maintaining licensed Thai providers as the default option. According to the revised approach, crypto ETFs will continue to be primarily required to use onshore digital asset custodians, while the SEC may permit the use of qualified foreign digital asset custodians when necessary and appropriate. For mutual funds and private funds investing in digital assets, foreign custodians would have to operate under the supervision of a regulator with legal authority over their activities, with their home jurisdiction needing regulatory standards and investor asset protection rules that the Thai SEC considers adequate. The framework also allows qualified digital asset custodians to serve as trustees for crypto ETFs, with providers needing sufficient financial resources and operating systems. Both products would trade exclusively on the Stock Exchange of Thailand, with Thai mutual funds and private funds also permitted to buy into these domestic vehicles alongside the foreign-issued crypto ETFs they can already hold, subject to existing investment limits.
The ETF framework is developing alongside significant changes to Thailand's derivatives market. In February, the government recognized cryptocurrencies as underlying assets under the Derivatives Trading Act, allowing assets such as Bitcoin to serve as the basis for regulated futures and options contracts. SEC secretary-general Pornanong Budsaratragoon said at the time that cryptocurrencies would be treated as permissible goods and variables under the derivatives framework. Two months later, regulators proposed simplifying derivatives access by allowing licensed digital asset companies to apply for derivatives licenses without establishing separate corporate entities. Thailand's work on locally traded crypto ETFs follows an earlier investment product approved in June 2024 for institutional and ultra-high-net-worth investors, when One Asset Management received approval for the ONE Bitcoin ETF Fund of Funds Unhedged. The current proposal represents a significant shift from the previous fund-of-funds structure to a direct spot ETF model, offering retail investors direct exposure rather than indirect investment through overseas vehicles.
The SEC will accept comments on both consultation papers until September 20, 2026 before proceeding with the regulatory process. Public consultation on the draft crypto ETF regulations opened on August 21, while the SEC announced the framework publicly on August 24. The rules would also expand investment options available to existing mutual funds and private funds, with such funds able to invest in Thai-domiciled crypto ETFs under the same investment control framework as foreign crypto ETFs. Alternative instruments referencing overseas crypto ETFs, such as depositary receipts linked to foreign crypto ETFs, are explicitly excluded from this initial phase. Implementation of the final framework is expected in Q3 2026, marking a significant step in Southeast Asia's crypto ETF regulation. It's worth noting that no Thailand crypto ETF has been approved yet, and no listing date has been set, with the SEC still needing to collect feedback, revise the draft, and decide whether to move forward with formal rulemaking.
