Thailand SEC opens consultation on draft rules for spot Bitcoin and Ether ETFs and foreign custodians

Thailand's Securities and Exchange Commission (SEC) has advanced its plans for locally listed spot Bitcoin and Ether exchange-traded funds (ETFs), moving from high-level principles to draft regulations and opening the proposals for public comment. At the same time, the regulator is reviewing the conditions under which mutual funds and private funds investing in digital assets may use foreign digital-asset custodians. The SEC said it is seeking feedback on two separate consultation papers: one sets out draft rules for Thailand-listed spot crypto ETFs; the other outlines qualification principles for foreign digital-asset custodians used by mutual and private funds. The consultation window runs through Sept. 20. Under the draft ETF framework, eligible underlying assets would be limited initially to Bitcoin and Ether only, and each Thailand-domiciled ETF would track a single crypto asset. Products referencing foreign ETFs—including depositary receipts that track foreign crypto ETFs—would not be allowed in the initial phase. Trading would be confined to the Stock Exchange of Thailand (SET). The draft rules also include an exposure requirement: each ETF would need to maintain an average net exposure of at least 80% of net asset value to its referenced crypto asset over each accounting year, reinforcing a design aimed at straightforward spot tracking rather than complex multi-asset structures. The SEC also clarified how other local vehicles could gain exposure. The proposals would allow mutual funds and private funds to invest in Thailand-domiciled crypto ETFs, in addition to foreign crypto ETFs they are already permitted to hold under existing investment limits. Even so, the SEC signaled that products built on foreign crypto ETFs—specifically depositary receipts tracking them—would remain off-limits at the outset. A separate consultation addresses custody. The SEC's revised approach would keep onshore digital-asset custodians as the default for crypto ETFs during the early stage. The regulator said it may permit qualified foreign custodians only when it considers such use "necessary and appropriate" given prevailing circumstances, leaving room for case-by-case judgment rather than automatic acceptance. For mutual and private funds, the SEC proposes additional conditions for foreign custodians. These custodians would need to be supervised by a regulator with legal enforcement powers and operate under regulatory and investor asset-protection standards the Thai SEC deems adequate. The SEC is effectively setting a qualification test instead of adopting a blanket approval regime. The consultations form part of Thailand's push to position itself as an institutional digital-asset hub, with the draft rules focusing on product design, exposure limits, and custody safeguards. The SEC noted that feedback from an April consultation broadly supported the direction of the framework, while custody concerns prompted adjustments. With both papers open until Sept. 20, market participants are expected to focus closely on how the SEC defines "necessary and appropriate" for foreign custody, and whether the exposure and eligibility rules change before the ETF rulebook is finalized.