Thailand advances spot Bitcoin and Ether ETF rules with 80% exposure floor

Thailand has moved its planned spot Bitcoin and Ether exchange-traded fund framework into the draft regulation stage, setting an 80% minimum exposure requirement while keeping domestic digital asset custodians as the primary custody option.
Summary

• Thailand has advanced its Bitcoin and Ether ETF framework to draft regulations.
• Locally listed ETFs would maintain at least 80% exposure to their underlying crypto asset.
• Bitcoin and Ether would be the only eligible assets during the initial phase.
• Domestic digital asset custodians would remain the primary custody option.
• Public comments on both proposals will remain open until Sept. 20.

Thailand's Securities and Exchange Commission said on Aug. 24 that it had opened two public consultations covering draft rules for locally established crypto ETFs and revised qualification standards for foreign digital asset custodians serving mutual and private funds.

The latest proposal advances a framework first put out for public comment in April, when the regulator sought views on the main principles governing crypto ETFs, investment management and custody. Most respondents supported the plan, according to the SEC, although feedback on custody arrangements led officials to revise part of the original approach.

During the first stage, asset management companies would be allowed to establish passive ETFs tracking only Bitcoin or Ether. Each fund would follow a single cryptocurrency, limiting the initial framework to the two assets the regulator currently considers sufficiently liquid and widely accepted for the product.

The SEC will accept comments on both consultation papers until Sept. 20 before proceeding with the regulatory process.

Thailand crypto ETFs would need at least 80% exposure

Under the draft rules, locally established crypto ETFs would trade exclusively on the Stock Exchange of Thailand, giving investors exposure to Bitcoin or Ether through securities accounts without requiring them to directly manage cryptocurrency wallets.

Each ETF would have to maintain average net exposure of at least 80% of its net asset value to its underlying cryptocurrency over each accounting year. Fund managers would also have to demonstrate sufficient operational readiness, including qualified personnel, appropriate systems, and access to service providers capable of handling the products.
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Thai regulators have been developing the structure throughout 2026. In January, crypto.news reported on plans to complete rules supporting local crypto ETFs after SEC deputy secretary-general Jomkwan Kongsakul said the products had already received approval in principle. At the time, regulators were working on detailed investment and operational requirements and considering market makers to address potential liquidity needs.

Kongsakul also said regulators viewed an ETF structure as a way of giving investors easier access to crypto while reducing operational issues tied to direct ownership, including wallet security and hacking risks.

Under the August draft, asset management companies would remain responsible for establishing and managing the funds, while investment activity involving digital assets could be delegated only to a licensed digital asset fund manager.

The rules would also expand investment options available to existing mutual funds and private funds. Such funds can already invest in foreign crypto ETFs under applicable investment limits, and the amendments would allow them to invest in Thai-domiciled crypto ETFs under the same investment control framework.

Alternative instruments referencing overseas crypto ETFs would remain unavailable during the first stage. The SEC said products including depositary receipts linked to foreign crypto ETFs would not initially be permitted, keeping locally established funds as the main listed structure for domestic investors seeking this type of exposure.

Domestic custodians would remain the primary option

Custody emerged as one of the main issues during the SEC's April consultation, leading the regulator to adjust its initial proposal while maintaining licensed Thai providers as the default option.

"Under the revised approach, crypto ETFs will continue to be primarily required to use onshore DA custodians, while the SEC may permit the use of qualified foreign DA custodians when necessary and appropriate in light of prevailing circumstances," the regulator said.

The revised model gives the SEC discretion to approve foreign custodians without removing the preference for domestic providers.

For mutual funds and private funds investing in digital assets, foreign custodians would have to operate under the supervision of a regulator with legal authority over their activities. Their home jurisdiction would also need regulatory standards and investor asset protection rules that the Thai SEC considers adequate.

The framework also allows qualified digital asset custodians and other properly prepared digital asset businesses to serve as trustees for crypto ETFs. Providers would need sufficient financial resources, personnel and operating systems and would have to continue meeting those requirements while performing trustee duties.

Thailand had already been working to increase locally based custody capacity. In May, the SEC separately proposed changes to net capital and digital asset custody rules intended to support more domestic trading and customer asset custody activity and reduce dependence on overseas service providers.

ETF rules follow Thailand's expansion of regulated crypto products

The ETF framework is developing alongside changes to Thailand's derivatives market. In February, the government recognized cryptocurrencies as underlying assets under the Derivatives Trading Act, allowing assets such as Bitcoin to serve as the basis for regulated futures and options contracts.

SEC secretary-general Pornanong Budsaratragoon said at the time that cryptocurrencies would be treated as permissible goods and variables under the derivatives framework, while regulators prepared contract and licensing requirements for firms offering the products.

Two months later, regulators proposed simplifying derivatives access by allowing licensed digital asset companies to apply for derivatives licenses without establishing separate corporate entities. Existing rules required businesses to create another entity for derivatives operations, adding costs and operational requirements.

The February framework also called for cooperation with the Thailand Futures Exchange on crypto-linked products, including Bitcoin futures, while broker and clearinghouse requirements were being reviewed.

Thailand's work on locally traded crypto ETFs also follows an earlier investment product approved for a narrower investor group. In June 2024, regulators approved the country's first spot Bitcoin ETF fund for institutional and ultra-high-net-worth investors.

One Asset Management received approval for the ONE Bitcoin ETF Fund of Funds Unhedged and not for Retail Investors, or ONE-BTCETFOF-UI. The product was structured as a fund of funds and was not offered to ordinary retail investors.

Bitcoin and Ether would lead the first phase

The new draft goes further by creating rules for crypto ETFs established in Thailand and listed directly on the Stock Exchange of Thailand, although the initial eligible asset list remains limited.

Bitcoin and Ether were selected because the SEC requires eligible cryptocurrencies to have high liquidity and broad market acceptance. Additional digital assets are not included in the first stage of the proposal.

Earlier regulatory discussions had already indicated that Thailand was considering expanding its range of regulated digital asset investment products as part of plans to develop the country as an institutional crypto market.

The SEC's January ETF plans formed part of a regulatory program that also included crypto derivatives and tokenization. Regulators were working with the Bank of Thailand on a tokenization sandbox, with bond tokens among the assets being considered for participation.

Investor protection requirements remain part of the ETF draft. The SEC's April proposal called for disclosures explaining each fund's structure and risks, along with investor education measures designed to ensure buyers understand cryptocurrency exposure before trading.

Asset managers establishing the funds would also need systems and personnel suited to digital asset operations, while custody would have to comply with the domestic requirements unless the SEC specifically permits a qualified overseas provider.

Public consultation on the draft crypto ETF regulations opened on Aug. 21, while the SEC announced the framework publicly on Aug. 24. Comments on the ETF rules and the separate foreign custodian proposal will remain open through Sept. 20.
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