Thailand Moves Crypto ETF Rulebook Into Draft Stage, Starting With Bitcoin and Ether

Thailand has moved closer to allowing locally listed cryptocurrency ETFs, with draft rules now open for public comment. The country's securities regulator said on Aug. 24 it launched a consultation on two documents: a framework for Thailand-domiciled crypto ETFs, and updated eligibility standards for overseas digital-asset custodians that serve mutual funds and private funds. Feedback will be accepted through Sept. 20. The first rollout is limited to Bitcoin and Ethereum. Under the draft, initial products must be passive and track only a single cryptocurrency. Each ETF would be tied to either Bitcoin or Ether, reflecting the regulator's emphasis on liquidity and market acceptance. Thailand-based crypto ETFs would be listed and traded only on the Stock Exchange of Thailand, allowing investors to gain exposure through regular securities accounts without managing on-chain wallets or private keys. The proposal also sets a minimum exposure requirement. Each ETF must maintain an average net exposure to its underlying crypto asset of at least 80% of net asset value over each fiscal year, aiming to keep spot tracking tight and limit drift from the reference asset. Fund managers would need to demonstrate operational readiness, including qualified staff, appropriate systems and capable service providers. Digital-asset investment activities may be delegated only to licensed digital-asset fund managers. For existing mutual funds and private funds, current rules allow allocations up to their investment limits into overseas crypto ETFs. If the amendments are approved, those funds would also be permitted to invest in Thailand-domiciled crypto ETFs under the same investment control framework. Custody remains a central focus. The Thai SEC said the revised framework will continue to prioritize licensed domestic digital-asset custodians, while allowing qualified overseas custodians when necessary. Any overseas custodian used by mutual funds or private funds must be supervised in its home jurisdiction, and its regulatory standards and investor asset protection rules must meet levels recognized by the Securities and Exchange Commission of Thailand. The draft would also allow qualified digital-asset custodians and other suitably prepared digital-asset service providers to act as trustees for crypto ETFs, provided they continuously meet requirements on financial strength, staffing and operating systems. The ETF initiative is part of a broader expansion of Thailand's digital-asset rulemaking. In February, the government brought cryptocurrencies into the list of permissible underlying assets under the Derivatives Trading Act, laying groundwork for Bitcoin-linked futures and options. Regulators have since floated proposals to streamline derivatives licensing for approved digital-asset firms. Thailand previously approved its first spot Bitcoin ETF fund in June 2024, though access was restricted to institutional and ultra-high-net-worth investors. The current draft, by contrast, is designed to create a dedicated framework for crypto ETFs established and directly listed in Thailand. Regulators have signaled they are progressing crypto ETFs, derivatives and tokenized products in parallel, including work with the Bank of Thailand on a tokenization sandbox that could include bond tokenization.