Thailand Takes a Step Forward: SEC Proposes New Rules to Allow Institutional Investors to Diversify into Cryptocurrency Markets

This move, designed to keep pace with international developments, opens the door for institutional investors to diversify into cryptocurrency markets under the guidance of professional fund managers.

The Thai Securities and Exchange Commission (SEC) has unveiled a proposal to permit institutional investors to indirectly access cryptocurrency markets through collective investment schemes.

 

This move aims to diversify investors' portfolios and align with the growing global interest in digital assets.

 

The proposal, now open for public feedback, comes as Thailand aims to modernize its financial regulations to keep pace with the rapidly evolving landscape.

 

Aimed at institutional investors, high-net-worth individuals, and fund managers, the new rules would allow securities companies and asset management firms to offer services related to crypto-ETFs and other institutional products. These firms would guide investors through the complexities of digital assets and manage the associated risks.

 

For retail mutual funds, the SEC proposes a 15% cap on exposure to digital assets. This measure aims to protect retail investors from the high-risk volatility inherent in the cryptocurrency market. In contrast, more sophisticated funds designed for institutional investors would face no cap, though they would still be required to diversify their investments to mitigate potential risks.

 

The SEC's draft proposal also introduces guidelines to differentiate between various types of digital assets. High-risk assets like Bitcoin would be treated differently than stablecoins such as Tether, which are designed to maintain a steady value.

 

Fund managers would need to exercise caution and adhere to their fiduciary duties when selecting appropriate investment channels for these assets.

 

To manage market risks, the SEC also proposes limits on the temporary holding of assets like Bitcoin or Ethereum. These assets could only be held for a maximum of five business days for trading purposes, ensuring that fund managers remain responsive to market changes while limiting prolonged exposure.

 

Furthermore, the SEC is expanding the Digital Asset Regulatory Sandbox to include a broader range of participants and services in the institutional digital asset market.

 

This move aims to foster innovation and competition while ensuring market stability and consumer protection.

 

Participants in the sandbox include digital asset exchanges, brokers, dealers, fund managers, advisers, and custodial wallet providers. The sandbox trial period is set at one year, with participants eligible to apply for extensions. Companies must demonstrate sufficient capital, robust management systems, and a clear plan for risk management to participate.

Thailand has long been a forward-looking player in the cryptocurrency space, with the SEC establishing a working group on digital asset regulation as early as 2018.

 

This latest proposal marks a significant step in Thailand's efforts to integrate institutional digital asset services into its regulatory framework.

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