Thai SEC Proposes Crypto Investment Options for Private and Mutual Funds

The move is part of a larger attempt to improve the country’s crypto economy, according to a recent Bangkok Post report.

The proposal, announced by the Thai Securities and Exchange Commission (SEC) on October 9, would permit funds to invest in investment tokens and crypto exchange-traded funds (ETFs) listed on U.S. stock exchanges. This could pave the way for a wider range of financial products linked to digital assets.

“The funds offered to institutional and ultra-high-net-worth investors who have high risk tolerance will be allowed to invest in crypto Exchange Traded Funds (ETFs) with no investment limit.” The announcement also added, “Investment tokens have key risks and features similar to traditional securities, such as debt securities. Therefore, the funds will be allowed to invest in investment tokens subject to current investment limits of traditional securities, such as single entity limit, group limit, and concentration limit.”

Anek Yooyuen, the SEC’s deputy secretary-general, explained that investment tokens would be treated like traditional securities such as stocks and bonds. The goal is to allow securities firms and asset managers to offer crypto-related products, especially to large investors. However, retail mutual funds would face a 15% cap on their crypto exposure, while institutional and high-net-worth investors would have no such limitations.

The SEC also intends to revise rules governing asset custody and information disclosure to accommodate funds operating in digital assets. Yooyuen emphasized that these adjustments will occur later this year.

In addition, the commission intends to apply different regulatory frameworks based on the risk profile of the digital assets. High-risk assets like Bitcoin and Ethereum will be subject to tougher regulations, whereas stablecoins may follow separate guidelines.

The SEC is currently seeking public input on the proposal, with the consultation period open until November 8, 2024. At the same time, the commission is exploring the possibility of allowing initial coin offering (ICO) portals to outsource tasks such as fundraising or project design, though a public hearing will be held before any such changes are finalized.

While these initiatives create new opportunities, the SEC is also strengthening oversight. It intends to impose stricter sanctions for infractions such as naked short selling and market manipulation. Fines for inappropriate trading orders by securities firms could be increased to 3 million baht from the existing 1 million baht. Firms found guilty of significant offenses may face license revocation.

Thailand has been making a concerted effort to create a more crypto-friendly environment. Earlier this year, the government approved a tax exemption on crypto earnings to boost the country’s competitiveness.

In August, the SEC established a Digital Asset Regulatory Sandbox, allowing ten private enterprises to perform trials of exchanging digital tokens and cryptocurrency for Thai baht, setting the groundwork for the usage of cryptocurrencies as a payment system.

As per the ‘2023 Global Cryptocurrency Adoption Index‘ by Chainalysis, Thailand stands at number ten for civilian adoption. According to the Global 2022 Digital Overview Report, among internet users globally, Thailand has one of the highest percentages of cryptocurrency ownership.

Furthermore, according to data from Statista.com, as of January 11, 2024, there were 13.02 million cryptocurrency users in Thailand. This represents almost 18.1% of the country’s entire population. It is anticipated that after ten years of steady development, there will be 17.67 million users in 2028.

The Bank of Thailand continues to prohibit cryptocurrency payments, but the SEC is likely to hold more negotiations with the central bank on the issue. Meanwhile, the regulator continues to shut down unauthorized platforms to protect Thai investors from unauthorized cryptocurrency services.