Thai SEC to allow crypto exposure for mutual and private funds

Thailand’s securities regulator has proposed new measures to allow mutual and private funds to invest in cryptocurrency, aiming to strengthen the country’s crypto economy. According to a report from the Bangkok Post, the Thailand Securities and Exchange Commission (SEC) announced on October 9 that it plans to permit funds to invest in investment tokens and cryptocurrency exchange-traded funds (ETFs) listed on U.S. stock exchanges.

SEC deputy secretary-general Anek Yooyuen explained that these “investment tokens” will be treated similarly to traditional securities, such as stocks and bonds, due to their comparable risk profiles. This change is intended to enable securities firms and asset managers to offer crypto products to larger investors.

Key provisions of the proposal include a 15% cap on crypto exposure for retail mutual funds, while institutional and high-net-worth investors would not face such restrictions. Yooyuen noted that the SEC will update relevant criteria later this year to address aspects such as asset custody and information disclosure for funds dealing with digital assets.

The SEC also plans to implement different regulatory guidelines based on the risk level of digital assets. For instance, high-risk assets like Bitcoin will have specific rules, while stablecoins may be governed by a different set of regulations. The public is invited to provide feedback on the proposal until November 8, 2024.

Additionally, the SEC is considering allowing initial coin offering (ICO) portals to outsource tasks like fundraising or project design if they lack in-house capabilities, although a public hearing will precede any implementation of this change.

At the same time, the SEC is tightening regulations, introducing harsher penalties for offenses like naked short selling and market manipulation. Fines for improper trading by securities firms could rise to 3 million baht, up from the current 1 million baht, with severe violations potentially resulting in license revocation.

Thailand’s Pro-Crypto Initiatives

Thailand has been taking steps to create a more crypto-friendly environment. Earlier this year, the cabinet approved a tax exemption on crypto earnings to enhance the country’s competitive edge globally. In August, the SEC launched a Digital Asset Regulatory Sandbox, allowing ten private firms to test the exchange of digital tokens and cryptocurrencies for Thai baht, paving the way for future cryptocurrency payments.

As of October 2024, the Bank of Thailand still prohibits crypto payments, but the SEC plans to discuss potential changes with the central bank before proceeding. Additionally, the SEC has been actively blocking unlicensed trading platforms to protect local investors from unauthorized services.