Thailand’s Securities and Exchange Commission has moved closer to launching domestic Bitcoin and Ether ETFs, publishing draft regulations Monday after months of consultation with market participants. According to reporting by CoinTelegraph, the regulator is now seeking public feedback on two separate frameworks: one governing Thai-listed spot crypto ETFs, and another setting qualification standards for foreign digital asset custodians.
The development marks a concrete step forward in Thailand’s stated strategy to position itself as a regional institutional hub for digital assets. This follows an April consultation that garnered broad support but raised specific concerns about custody arrangements—prompts that shaped the latest proposal.
Bitcoin and Ether as Initial Assets
The framework restricts initial ETF offerings to Bitcoin and Ether, the only two cryptocurrencies eligible for the product structure. Asset managers seeking approval would need to establish passive index-tracking vehicles, with each ETF tied exclusively to a single underlying asset.
The regulator has set a minimum threshold: ETFs must maintain at least 80% average net exposure to their tracked asset over each accounting year. This guard rail prevents the products from drifting into speculative hybrid structures while preserving the passive tracking mandate.
Once approved, Bitcoin and Ether ETFs will trade solely on the Stock Exchange of Thailand (SET), creating a controlled on-exchange market distinct from offshore crypto trading venues.
Custody Framework and Foreign Providers
Thailand’s revised custody approach prioritizes onshore digital asset custodians during the initial rollout phase. However, the SEC has left room for flexibility: foreign custodians may be permitted “when necessary and appropriate in light of prevailing circumstances,” signaling that market gaps or operational constraints could justify exceptions.
Foreign custodians serving mutual funds and private funds investing in digital assets will face stricter qualification requirements. They must operate under regulatory supervision with powers enforceable by their home regulator, and maintain investor asset protection standards that the Thai SEC deems adequate—a standard that will likely exclude custody providers from jurisdictions with weaker oversight regimes.
What This Means for Fund Managers
Under the draft rules, Thai mutual funds and private funds can now layer exposure via multiple channels: locally domiciled crypto ETFs plus existing permissions to invest directly in foreign-listed crypto ETFs, all subject to existing investment caps. Alternative products—such as depositary receipts tracking foreign crypto ETFs—remain prohibited during the initial phase, preventing indirect hedging strategies.
This two-tier approach reflects regulatory caution. By mandating onshore custodians first and requiring foreign providers to meet strict capital and compliance standards, the Thai SEC is attempting to manage operational and counterparty risk while testing market demand.
The regulator will accept public comments until September 20, giving stakeholders roughly two weeks to weigh in on implementation details that will shape how institutional investors access Bitcoin and Ether within Thailand’s borders.