Thailand’s securities regulator aims to create new opportunities in the crypto market by allowing investment trusts and private funds to participate in cryptocurrencies.
According to a recent Bangkok Post report, the move is part of a larger attempt to improve the country’s crypto economy.
The proposal, announced by the Securities and Exchange Commission of Thailand (SEC) on October 9, would allow funds to invest in investment tokens and crypto exchange-traded funds (ETFs) listed on U.S. stock exchanges. It is. This could pave the way for a wide range of financial products linked to digital assets.
“Funds provided to institutional and ultra-high-net-worth investors with high risk tolerance will be permitted to invest in virtual currency exchange traded funds (ETFs) without investment restrictions.” The announcement also states: “Investment tokens have significant risks and characteristics similar to traditional securities such as bonds. Accordingly, the Fund will be subject to the current investment limitations of traditional securities, such as single entity limits, group limits, and concentration limits. You will be allowed to invest in investment tokens.”
Regulatory adjustments are on the horizon
SEC Deputy Secretary General Anneke Yuyuen explained that investment tokens will be treated like traditional securities such as stocks and bonds. The goal is to enable brokerages and asset managers to offer crypto-related products, especially to large investors. However, while retail mutual funds are subject to a 15% crypto exposure limit, institutional and high-net-worth investors have no such limit.
The SEC also plans to revise rules governing asset custody and disclosure to accommodate funds operating in digital assets. Yuyuan stressed that these adjustments will be made in the second half of this year.
Additionally, the Commission plans to apply different regulatory frameworks based on the risk profile of digital assets. High-risk assets such as Bitcoin and Ethereum are subject to stricter regulations, while stablecoins may be subject to different guidelines.
The SEC is currently seeking public comment on this proposal, with a consultation period ending on November 8, 2024. At the same time, the commission is exploring the possibility of outsourcing operations such as fundraising and projects to initial coin offering (ICO) portals. However, a public hearing will be held before any such changes are finalized.
While these efforts create new opportunities, they also increase SEC oversight. The government plans to impose stricter sanctions for violations such as naked short selling and market manipulation. Fines for improper trading orders by securities companies could be increased to 3 million baht from the current 1 million baht. Businesses found guilty of serious crimes may face license revocation.
Thailand’s efforts to create a crypto-friendly environment
Thailand continues to make concerted efforts to create a more cryptocurrency-friendly environment. Earlier this year, the government approved tax exemption for crypto income to boost the country’s competitiveness.
In August, the SEC established the Digital Asset Regulatory Sandbox, allowing 10 private companies to conduct trials of converting digital tokens and cryptocurrencies into Thai baht, setting the stage for the use of cryptocurrencies as payment systems.
According to Chainalysis’ 2023 Global Cryptocurrency Adoption Index, Thailand ranks 10th in terms of private cryptocurrency adoption. According to the Global 2022 Digital Overview Report, Thailand has one of the highest rates of cryptocurrency ownership among internet users worldwide.
Furthermore, as of January 11, 2024, there are 13.02 million crypto users in Thailand, according to data from Statista.com. This is almost 18.1% of the country’s total population. After 10 years of steady development, the number of users is expected to reach 17.67 million by 2028.
The Bank of Thailand continues to prohibit payments in cryptocurrencies, but the SEC is likely to hold further negotiations with the central bank on this issue. Meanwhile, regulators continue to shut down unlicensed platforms to protect Thai investors from unlicensed crypto services.
