Thai SEC to allow crypto exposure for mutual and private funds

Thailand’s securities regulator has proposed allowing mutual and private funds to invest in cryptocurrency, marking its latest effort to bolster the country’s crypto economy.

According to a Bangkok Post report citing an Oct. 9 announcement from Thailand’s Securities and Exchange Commission, the proposal outlines plans to let funds invest in investment tokens and crypto exchange-traded funds listed on U.S. stock exchanges.

SEC deputy secretary-general Anek Yooyuen stated that “investment tokens” would be treated similarly to securities such as stocks and bonds, given their comparable risks, aiming to allow securities firms and asset managers, to offer crypto products to large investors.

One key provision is that retail mutual funds would face a cap, limiting their crypto exposure to 15%, while institutional and high-net-worth investors would be free from such restrictions.

Yooyuen added that the relevant criteria would be updated later this year to accommodate funds dealing with digital assets, noting that these changes will include aspects like “asset custody” and “information disclosure.”

Further, the commission plans to apply different rules based on the risk level of digital assets. High-risk assets, such as Bitcoin, will have specific guidelines, while stablecoins may follow a different set of regulations.

The SEC is currently seeking public feedback on the proposal until Nov. 8, 2024.

Simultaneously, the SEC will also consider allowing initial coin offering portals to outsource some tasks, such as fundraising or project design if they lack in-house capabilities, the report added. Although, a public hearing would be held before this is implemented.

However, alongside these new opportunities, the SEC is tightening the rules, introducing tougher penalties for violations like “naked short selling” and market manipulation. 

Fines for improper trading orders by securities firms are expected to rise to 3 million baht, up from the current 1 million baht. Firms found guilty of severe offenses could also have their licenses revoked.

Thailand’s pro-crypto moves

Regulators in Thailand have been taking steps to foster a more crypto-friendly environment in the nation. Earlier this year, the Thai cabinet approved a tax exemption on crypto earnings to give the nation a competitive edge on a global stage.

Months later, the SEC launched a Digital Asset Regulatory Sandbox in August, to allow ten private firms to conduct trials for exchanging digital tokens and cryptocurrency for Thai baht, laying the foundation for the use of cryptocurrencies as a payment method.

As of October 2024, crypto payments are still prohibited by the Bank of Thailand, but the SEC plans to discuss the matter further with the central bank before proceeding with any implementation.

Thailand also prohibits unauthorized crypto trading and the commission moved to block unlicensed platforms to prevent locals from accessing services.