Thailand SEC Circulates Draft Rules for Spot Bitcoin and Ether ETFs

Thailand's Securities and Exchange Commission (SEC) has taken a step toward allowing spot Bitcoin and Ether exchange-traded funds (ETFs), moving from a principles-based concept to draft regulations and an updated custody framework. In a notice issued Monday, the SEC opened public consultation on two papers: one sets out draft rules for spot crypto ETFs to be listed in Thailand, and the other proposes qualification principles for foreign digital asset custodians used by mutual funds and private funds investing in digital assets. Both consultations run until Sept. 20. Under the draft, spot Bitcoin (BTC) and Ether (ETH) ETFs would be listed and traded exclusively on the Stock Exchange of Thailand (SET). Only these two cryptocurrencies are eligible at this stage, and each ETF would be limited to tracking a single asset. The proposed rules also include an exposure threshold: each fund would be required to maintain an average net exposure of at least 80% of net asset value to its referenced cryptocurrency over each accounting year. The SEC said it revised its approach after feedback received during an earlier consultation in April, with custody emerging as the central issue. For the initial phase, the regulator expects ETF structures to rely mainly on onshore digital asset custodians. Qualified foreign custodians may be permitted only when the SEC deems it necessary and appropriate given prevailing circumstances. In the separate consultation focused on foreign custodians used by mutual and private funds, the SEC outlines clearer expectations. Foreign providers would need to be supervised by a regulator with legal enforcement powers and meet standards the Thai SEC considers sufficient for regulation and investor asset protection. The draft framework also clarifies what fund managers can do in the early rollout. Mutual funds and private funds in Thailand would be allowed to invest in Thailand-domiciled crypto ETFs. They may also invest in foreign crypto ETFs where such investments are already permitted, subject to existing investment limits. At launch, the SEC is not proposing indirect "wrapper" products linked to foreign crypto ETFs, including depositary receipts that track those offshore funds. Market participants are likely to focus on how the SEC interprets the circumstances under which foreign custodians may be used, as custody capacity and oversight are often key constraints for spot crypto ETF approvals. With the consultation window open until Sept. 20, the next phase will hinge on whether feedback further reshapes custody rules, product eligibility, and the mechanics of spot crypto ETF listings on the SET.