Thailand’s Proposed Framework for the Establishment and Regulation of Crypto ETFs
1. Introduction
The Securities and Exchange Commission of Thailand (“SEC Thailand”) has opened a public hearing on its proposed draft notifications on the establishment and regulatory framework for crypto exchange-traded funds (“crypto ETFs”) in Thailand. Comments are due by 20 September 2026. It follows an earlier public hearing on the principles for crypto ETFs, conducted from 10 April to 11 May 2026, in which most respondents agreed with the SEC’s proposals.
The Capital Market Supervisory Board, at its meeting No. 6/2569 on 16 June 2026, and the Securities and Exchange Commission, at its meeting No. 8/2569 on 2 July 2026, approved the principles underlying the framework. The SEC has since prepared 11 draft notifications, together with related appendices and forms.
The draft notifications address the establishment and operation of crypto ETFs, including investment and custody requirements, disclosure and investor-protection measures, delegation of investment management, and the eligibility of DA Custodians and other digital asset (“DA”) business operators to act as fund trustees.
The proposals aim to increase investment options by allowing investors to gain exposure to cryptoassets through regulated capital-market products; promote the development of the capabilities of Thai business operators; support product diversity in Thailand’s capital market; and strengthen the crypto ETF ecosystem under an investor-protection framework.
2. Key Provisions of the Draft Notifications
1) Establishment of Crypto ETFs
The fund name must reflect the type of cryptoasset on which the crypto ETF’s investment policy focuses, such as Bitcoin ETF or Ethereum ETF. Before applying for approval, an asset management company (“AMC”) must demonstrate that it is adequately prepared in terms of personnel, systems, risk management, investment-management arrangements, and relevant service providers, including the DA Custodian, Participant Dealer (“PD”), Market Maker (“MM”), and investment channels. The standard approval process will apply.
2) Investment Rules and Fund Classification
Crypto ETFs will be classified as alternative investment funds and must invest in a single crypto, such as Bitcoin or Ethereum. The net exposure to that crypto must average at least 80% of NAV over the accounting year.
Crypto ETFs must be structured as passive ETFs seeking to track the price movements of the relevant crypto. They may not obtain crypto exposure through derivatives and may not lend crypto holdings or otherwise generate yield from them. Initially, only Bitcoin and Ethereum will be permitted, but the SEC may designate additional eligible crypto in the future based on market development, liquidity, price reliability, custody readiness, and investor-protection considerations.
3) Investment Channels and Fiduciary Duty
The AMC must exercise its fiduciary duty in selecting investment channels and service providers, which must be reliable and regulated in Thailand or the relevant jurisdiction. These include digital asset exchanges (“DAEXs”), digital asset brokers (“DA brokers”), and digital asset dealers (“DA dealers”). Where operationally necessary, for example, to settle transactions through a foreign intermediary in stablecoins, crypto ETFs may hold other digital assets, such as stablecoins, only to the extent necessary, subject to the same fiduciary-duty assessment.
4) Custody of Crypto ETF Assets
The primary rule is that a DA Custodian must hold a Thai license. If the fund trustee does not itself hold the crypto in custody, any appointed agent must be a DA Custodian licensed in Thailand.
The SEC may in the future, where necessary and appropriate, issue an announcement permitting the use of foreign DA Custodians. Any permitted foreign DA Custodian must meet the same qualification requirements as foreign DA Custodians providing custody services to DA businesses and must be supervised either by a regulatory authority that is a member of the International Organization of Securities Commissions (IOSCO) and an Appendix A signatory to the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU) or by a regulator in an SEC-approved country with adequate investor-protection standards.
The SEC is considering 11 countries for this purpose: South Korea, Hong Kong, Japan, France, Malaysia, Germany, Luxembourg, Liechtenstein, Singapore, the United States, and Ireland. A country’s inclusion would not automatically qualify every provider in that country. The AMC must assess providers individually before appointment and throughout the relationship.
5) Mutual Fund and Private Fund Investment in Crypto ETFs
Retail mutual funds, AI funds, UI funds, and private funds may invest in crypto ETFs domiciled in Thailand, whereas the previous framework permitted investment only in foreign crypto ETFs. Applicable investment limits and other requirements will continue to apply. In addition, securities companies may provide services relating to foreign crypto ETFs to investors only where the investor is an institutional investor or an ultra-high-net-worth investor.
6) Disclosure and Investor Protection
Crypto ETFs must disclose additional information in their fund schemes and prospectuses, including the investment policy; benefits and restrictions associated with holding crypto; the custody policy; fees and expenses payable in digital assets; the creation and redemption mechanics; and the relevant service providers and their roles.
The disclosure must also address risk factors and contingency measures, including price volatility, theft or loss of cryptoassets, disruption involving a PD, disruption of a crypto market, and volatility, unreliability, or unavailability of the relevant price index. Potential conflicts of interest must also be disclosed.
Crypto ETFs will be assigned a risk level of 8+, the highest category. Their factsheets must warn that the fund is unsuitable for investors seeking stable returns or capital preservation. Before the first investment, investors (other than institutional investors) must receive educational materials such as videos, articles, or FAQs and complete an interactive risk-communication and acknowledgment process, such as a pop-up confirmation. The suitability test is being updated to include DA-related questions, and investors should not invest more than 5% of their total investment portfolio in crypto-related products.
7) Margin Lending Restriction
Securities companies will be prohibited from providing margin loans for purchases of crypto ETFs. The restriction reflects the high price volatility of the underlying DA, which makes margin lending inappropriate.
Crypto ETFs may nevertheless be accepted as collateral, but they may not be used to create buying power.
8) Delegation of Investment Management
Digital Asset Fund Managers (“DAFMs”) holding Thai licenses may be delegated responsibility for managing mutual funds’ DA investments. The arrangement is intended to provide a clear framework for collaboration between the AMC and DA specialists without requiring the delegate to be a securities business operator licensed to manage private funds.
The AMC will remain responsible as the mutual fund manager and will remain subject to the strict supervisory framework governing outsourcing and delegation.
9) DA Custodians and DA Business Operators as Fund Trustees
DA Custodians and other qualified DA business operators, such as DAEXs and DA brokers, may serve as fund trustees specifically for crypto ETFs. They must satisfy requirements relating to financial standing, capital maintenance, personnel, and operational systems comparable to those applicable to existing fund trustees, and must continue to meet those requirements throughout their appointment.
They must also maintain internal controls and independence from the fund manager. A DA Custodian that itself holds the crypto in custody may not appoint a sub-custodian for the DA. Other DA business operators serving as trustees, such as a DAEX, may not custody the crypto themselves and must appoint a licensed DA Custodian for that purpose.
3. Expected Timeline and Market Impact
The regulations are expected to take effect later in 2026, once the relevant notifications are issued and published as required. Market participants should therefore assess their readiness and begin preparing before implementation.
Investors will gain a more regulated route to crypto exposure through capital-market products, with professional management, custody, disclosure, and protection mechanisms, but crypto ETFs will remain high-risk products that may not suit investors with a low tolerance for risk. AMCs and DAFMs will have opportunities to develop new products and capabilities, but will need personnel, systems, risk-management frameworks, and suitable investment channels.
Fund trustees and DA Custodians will have expanded roles and greater responsibilities relating to custody, controls, independence, and oversight. DA business operators such as DAEXs and DA brokers may become investment channels for mutual funds and will need systems for access controls, transaction monitoring, and support for fund operations.
PDs and MMs will support the creation and redemption mechanism and help improve pricing and facilitate arbitrage, but will need systems and risk-management capabilities for DA transactions. More broadly, the framework will connect Thailand’s capital market with the DA ecosystem and may support long-term growth, while volatility in DA markets could affect investor confidence in the capital market.
4. Conclusion
The draft notifications represent a significant step in Thailand’s capital market development by creating a regulated framework for crypto ETFs. The framework seeks to balance investor protection with market development by combining product access with requirements for regulated service providers, custody, disclosure, and investor education.
Chandler Mori Hamada will closely monitor these legal developments and keep you updated once they are enacted. If you have any questions in relation to the issues raised in this newsletter, please contact the authors listed above.
