Thailand’s Securities and Exchange Commission (SEC) has made a significant move to accommodate the increasing interest in cryptocurrency investments from institutional investors. On October 9, the finance regulator proposed allowing mutual and private funds to invest in cryptocurrency products, including exchange-traded funds (ETFs) listed on U.S. stock exchanges.
Opening Doors for Institutional Investors
This proposal is designed to enable securities companies and asset management firms to offer crypto-related investment products to large-scale investors. This decision comes in response to the growing demand from institutional players who are eager to diversify their portfolios with digital assets. According to SEC deputy secretary-general Anek Yooyuen, investment tokens will be categorized similarly to transferable securities like stocks and bonds due to their comparable characteristics and risks.
| Investment Type | Proposed Rules |
|---|---|
| Retail Mutual Funds | Limited to 15% allocation in crypto investments |
| Institutional Investors | No cap on crypto exposure |
| Investment Tokens | Treated like stocks and bonds due to similar risk profiles |
While the proposal aims to broaden investment opportunities, the SEC plans to implement different rules based on the risk profiles of various digital assets. High-risk assets such as Bitcoin will be treated differently from more stable options like stablecoins. This tiered approach reflects an understanding of the diverse nature of the crypto market and the associated risks.
The SEC’s strategy also includes revising the criteria for managing funds that invest in crypto assets. These revisions will cover asset custody, value calculation, information disclosure, and advertising practices. By enhancing regulatory clarity, the SEC aims to foster a safer investment environment for all market participants.
Initial Coin Offering (ICO) Portals
Another notable aspect of the proposal is the plan to authorize initial coin offering (ICO) portals. These portals would enable companies to engage in token fundraising or design investment projects while using outsourced services. This initiative could spur innovation in the crypto sector, providing startups with new avenues for capital raising. However, the SEC is also taking a firm stance against market misconduct, with plans to increase fines for activities such as naked short-selling and market manipulation. Earlier this year, the SEC demonstrated its commitment to regulating the market by blocking unlicensed crypto exchanges from operating in the country.
To further enhance the regulatory framework, the SEC is preparing to launch a Digital Asset Regulatory Sandbox. This initiative will involve collaboration with ten private firms to conduct pilot projects for exchanging crypto assets for local currency. The establishment of this sandbox could pave the way for broader acceptance of crypto payments, currently prohibited by Thailand’s central bank. The SEC will need to engage in discussions and seek approval from the Bank of Thailand to allow cryptocurrencies to be utilized as a means of payment. This collaboration is crucial, as it could significantly impact the future of digital currency transactions within the country.
Continued Popularity of Crypto Trading
Despite regulatory uncertainties, retail crypto trading remains robust in Thailand. The country’s largest cryptocurrency exchange, Bitkub, has reported impressive daily trading volumes of nearly $30 million, according to CoinGecko. This popularity underscores the strong interest among the Thai populace in engaging with digital currencies, even amid evolving regulatory landscapes.
The Thai SEC’s proposal to allow mutual and private funds to invest in cryptocurrency products marks a pivotal moment for the Thai financial landscape. By enabling investment in digital assets, the SEC aims to bridge the gap between traditional finance and the burgeoning crypto market. As regulatory frameworks continue to develop, Thailand could position itself as a significant player in the regional cryptocurrency landscape, offering both retail and institutional investors diversified and regulated investment opportunities.
Featured image credit: DALL-E by ChatGPT
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