Thai SEC Proposes New Rules for Crypto Investment in Mutual and Private Funds

The Thai Securities and Exchange Commission (SEC) has proposed new regulations that would allow mutual and private funds to invest in digital assets in an effort to align with international developments and address growing interest from institutional investors.

A draft proposal, published on Wednesday, is seeking public feedback on revisions to the criteria for funds investing in digital assets.

The SEC is proposing to allow securities companies and asset management firms to offer services to large investors interested in diversifying into crypto-related products, such as exchange-traded funds. The regulator aims to align with international developments in digital assets and create more opportunities for investors to diversify their portfolios under expert management, it said.

It follows a surge in international interest and demand for US-listed Bitcoin and Ethereum ETFs, which were greenlit for trading in January and May, respectively.

The regulator noted that while Thai investors could already access crypto ETFs abroad, the current framework for mutual funds, which has been in place since 2015, has not kept pace with digital asset investing changes overseas.

"The SEC Office sees fit to adjust the criteria for accepting investment in digital assets to be consistent with international development," a rough translation of the proposal reads.

Proposed rules would differentiate between high-risk assets, such as Bitcoin, and stablecoins, like Tether, designed to maintain a steady value.

Thailand's SEC also emphasized the need for fund managers to exercise “fiduciary duty in selecting appropriate investment channels” and to manage associated risks.

The draft outlines limits on digital asset exposure for various fund types. Retail mutual funds would be restricted to a 15% allocation in crypto investments, while more sophisticated funds for institutional and ultra-high-net-worth investors would face no cap on exposure, though they must diversify to manage risk.

The SEC's proposal also includes guidelines for the temporary holding of assets such as Bitcoin or Ethereum, capping the holding period to five business days for trading purposes. "Funds may need to hold crypto assets to buy, sell, or exchange digital assets," the SEC said.

Public comments on the proposal will be accepted until November 8, with final regulations expected next year.