Thai SEC to allow crypto exposure for mutual and private funds

Thailand’s securities regulator has proposed allowing mutual and private funds to invest in cryptocurrency, marking the country’s latest effort to support the crypto economy.

The proposal outlines plans to allow funds to invest in U.S.-listed investment tokens and crypto exchange-traded funds, according to a Bangkok Post report citing an Oct. 9 announcement by the Securities and Exchange Commission of Thailand.

SEC deputy secretary general Anek Yooyuen stated that “investment tokens” will be treated similarly to securities such as stocks and bonds, given their comparable risks, aimed at allowing securities firms and asset managers to offer crypto products to large investors.

One of the key provisions is that retail investment funds face a cap limiting their crypto exposure to 15%, while institutional and high-net-worth investors are exempt from such restrictions.

Yooyuen stated that the relevant criteria will be updated later this year to adapt to funds dealing in digital assets, and that these changes will include aspects such as “asset custody” and “information disclosure”.

Additionally, the commission plans to apply different rules depending on the risk level of digital assets. While high-risk assets like Bitcoin will have specific rules, stablecoins may be subject to different regulations.

The SEC is currently seeking public feedback on the proposal by November 8, 2024.

Simultaneously, the SEC will also consider allowing initial coin offering portals to outsource certain tasks, such as fundraising or project design, if they do not have in-house capabilities, the report said. However, before this is implemented, a public hearing will be held.

But along with these new opportunities, the SEC is tightening the rules and introducing harsher penalties for violations such as “naked short selling” and market manipulation.

Penalties for improper trading orders by securities firms are expected to increase from the current 1 million baht to 3 million baht. The licenses of companies found guilty of serious crimes may also be revoked.

Thailand’s pro-crypto moves

Regulators in Thailand are taking steps to develop a more crypto-friendly environment in the country. Earlier this year, the Thai cabinet approved a tax exemption for crypto earnings to give the country a competitive advantage on the global stage.

Months later, the SEC launched a Digital Asset Regulatory Sandbox in August to allow ten private firms to experiment with exchanging digital tokens and cryptocurrencies for Thai baht, laying the groundwork for using cryptocurrencies as a payment method.

As of October 2024, crypto payments are still banned by the Bank of Thailand, but the SEC plans to discuss the issue further with the central bank before taking any action.

Thailand also bans unauthorized crypto trading, and the commission has moved to block unlicensed platforms to prevent locals from accessing services.