Client Alert: SEC Issues Regulations for Crypto ETFs in Thailand
Further to our newsletter of 25 August 2026 (read more HERE) on Thailand’s proposed framework for the establishment and regulation of crypto exchange-traded funds (“crypto ETFs”), the Securities and Exchange Commission of Thailand (“SEC”) has issued 11 notifications implementing the framework. The notifications are dated 6 October 2026 and take effect on 16 October 2026.
Crypto ETFs are funds that invest in cryptocurrencies and whose units trade on the stock exchange like shares. The new rules aim to expand investment opportunities, build up the capabilities of Thai business operators, diversify the range of products in the Thai capital market, and better prepare the crypto ETF ecosystem, all within a framework that puts investor protection first. The SEC held public hearings on the proposed principles in April and May 2026 and on the draft notifications in August and September 2026, with most respondents in favor. The 11 notifications comprise five notifications of the Capital Market Supervisory Board and six notifications of the Office of the SEC. The Capital Market Supervisory Board notifications amend the rules on the establishment of mutual funds and private fund management agreements, investment of funds, services for investment in foreign-currency-denominated capital market products, outsourcing of business-related functions, and lending for the purchase of securities. The Office of the SEC notifications include a new notification setting out the list of cryptocurrencies in which crypto ETFs may invest, as well as amendments to the rules on mutual fund management projects, prospectuses, the qualifications and registration of mutual fund supervisors, and contacting and servicing clients.
Below is a summary of the key provisions.
1. Establishment and Regulation of Crypto ETFs
Crypto ETFs must comply with the regulatory framework generally applicable to ETFs, including the rules governing investment in digital assets (“DA”) by mutual funds. The SEC has also prescribed the following additional investor protection measures:
(a) AMC readiness: An asset management company (“AMC”) seeking to establish a crypto ETF must demonstrate that it is adequately prepared in terms of its personnel, operational systems, and approach to managing cryptocurrency investments, and must show that the service providers necessary to manage the fund are ready to provide their services. The name of the fund must reflect the cryptocurrency in which it invests.
(b) Investment policy and structure: A crypto ETF must be structured as a passive investment vehicle, established and managed with the aim of tracking the price of the cryptocurrency in which it invests. The fund must maintain an average net direct exposure to a single cryptocurrency of at least 80 percent of its net asset value (“NAV”) over each accounting year.
(c) Eligible cryptocurrencies: In determining which cryptocurrencies a crypto ETF may invest in, the SEC will take into account factors such as liquidity and broad market acceptance, and the availability of suitable trading venues, a regulated futures market referencing the cryptocurrency, a price index published by a reliable index provider, and a licensed DA custodian able to hold it in custody. During the initial phase, the only eligible cryptocurrencies are Bitcoin (BTC) and Ethereum (ETH).
(d) Safekeeping of fund assets: Crypto ETF assets may be safeguarded only by DA custodians licensed in Thailand and regulated by the SEC.
(e) Trading venue and investor protection: Crypto ETFs will be listed and traded exclusively on the Stock Exchange of Thailand (“SET”). Securities companies must educate investor on the characteristics and risks of crypto ETFs and require them to acknowledge the risks and confirm that they understand those risks before trading. Securities companies must also emphasize to investors the importance of appropriate asset allocation, avoiding concentrated investment in DA, and making investment decisions consistent with their risk tolerance.
(f) No margin lending: Securities companies may not provide margin loans for the purchase of crypto ETF units, as these units have been excluded from the securities eligible for margin lending. This is consistent with the existing position for cryptocurrency bought through DA business operators, where loans to fund such purchases are not allowed.
(g) Disclosure: AMCs must disclose sufficient information for investors to understand the characteristics, structure, investment mechanisms, service providers, and specific risks of crypto ETFs. The fund’s management project must also set out the fund’s cryptocurrency custody policy, the rights and limitations arising from holding the cryptocurrency, and details of any fees or expenses paid in DA to service providers.
2. Outsourcing of Digital Asset Investment Management
An AMC may outsource the management of a mutual fund’s investments in cryptocurrency or digital tokens only to a licensed cryptocurrency fund manager or digital token fund manager, as applicable. The aim is to ensure that the outsourced function is carried out by a fit and proper entity subject under regulatory supervision suited to the nature of these assets.
3. DA Business Operators as Mutual Fund Supervisors for Crypto ETFs
(a) Eligibility: DA custodians and other DA business operators that are adequately prepared in terms of their personnel and operational systems may apply to register as mutual fund supervisors for crypto ETFs under Section 121 of the Securities and Exchange Act B.E. 2535 (1992).
(b) Scope and qualifications: A DA business operator registered as a mutual fund supervisor may act as supervisor only for crypto ETFs. It must demonstrate adequate financial standing, personnel, and operational systems, consistent with the existing qualification requirements for mutual fund supervisors, and must maintain these qualifications for as long as it acts as supervisor. If it ceases to meet any of these qualifications, it must notify the Office of the SEC in writing by the next business day.
(c) Custody arrangements: A supervisor that is a licensed DA custodian must hold the fund’s crypto assets itself, using secure custody systems. A supervisor that is another type of DA business operator must appoint a sub-custodian. In either case, the fund’s DA must be held by a licensed DA custodian.
(d) Foreign DA custodians: In the future, and only in circumstances prescribed by the Office of the SEC, a crypto ETF may use a foreign DA custodian. The foreign custodian must meet the prescribed qualifications and be supervised either by a regulator that with Signatory A status under the IOSCO Multilateral Memorandum of Understanding or by a regulator in one of the jurisdictions listed by the Office of the SEC as having adequate standards of regulation and investor asset protection.
4. Investment by Mutual Funds and Private Funds in Thai Crypto ETFs
The SEC has amended its rules so that mutual funds and private funds may invest in Thai crypto ETFs. Previously, they could invest only in foreign crypto ETFs. These investments remain subject to the existing investment limits. For private funds of general (retail) investors, investment in crypto assets is permitted only indirectly, through units of foreign funds or Thai mutual funds.
5. Restrictions on Products Related to Foreign Crypto ETFs
To support the development of Thai crypto ETFs and strengthen the capabilities of Thai business operators, the SEC will not, during the initial phase, allow alternative products linked to foreign crypto ETFs, such as depositary receipts (DRs) referencing those ETFs, to be issued, established, or offered. In addition, securities companies may not facilitate investment in foreign funds with characteristics similar to crypto ETFs for clients who are neither institutional investors nor ultra-high-net-worth investors.
If you have any questions in relation to the issues raised in this client alert, please contact the author listed above.
