Following the approval for crypto ETF establishment and trading on the US stock exchanges, a number of Thai investors show investment interest in such product. Securities companies are allowed to provide services to non-retail investors** regarding investment in foreign products without investment limit. However, the current regulations concerning investment of Funds do not cover investment in digital assets. Therefore, the SEC, with the approval of the SEC Board at its meetings convened in December 2023 and March 2024, and the Capital Market Supervisory Board at its meeting in April 2024, deems it is appropriate to amend the regulations for the Funds investing in digital assets with proper measures for investor protection. The key points of the amendments are as follows: 

  1. To add Investment Token as an eligible asset for investment with an investment limit similar to that of transferable securities such as stocks and bonds because of similar characteristics and risks; 

2. To allow the Funds to invest in crypto assets under a risk level appropriate for the types of investors. For the Funds targeting ultra-high net worth investors***, they would be allowed to invest in crypto ETFs without any investment limit in order to create equal competition between securities companies and asset management companies. In the case where such Funds invest in crypto assets directly or indirectly via derivatives, the investment must be capped at 20 percent of the NAV. Meanwhile, the Funds for retail investors**** would be allowed to have total crypto asset exposure through ETFs or foreign mutual funds, capped at 5 percent of the NAV, for the benefit of asset allocation through experts. These Funds must meet the following criteria:

     (1) Being established after the amendments take effect to prevent impacts on the existing investors who may not wish to carry risks in such products;  

   (2) Implementing an active management strategy and being a mixed fund with an investment policy primarily focusing on asset allocation, equity funds or alternative funds, excluding tax incentive funds; 

   (3) Disclosing fund facts and warnings on crypto asset exposure clearly for investors’ information.    

3. Revising relevant regulations to accommodate the establishment and management of Funds investing in DA, for example, asset custody, calculation of DA value, disclosure of information, appropriate advertising and adjustment of suitability test to cover crypto asset investment, etc. 

The consultation paper is available at: https://www.sec.or.th/TH/Pages/PB_Detail.aspx?SECID=1020. Stakeholders and Interested parties are welcome to submit comments and suggestions via the SEC website or email: thanunya@sec.or.th, chavisa@sec.or.th or pattarav@sec.or.th. The public hearing ends on 8 November 2024.

Remarks: 

* Digital Assets (DA) refer to (1) investment tokens and (2) crypto assets, i.e., (2.1) cryptocurrency whose value is tied to another currency (stablecoin), ex., Central Bank Digital Currency (CBDC), and cryptocurrency whose value is not tied to another currency (blank coin), ex., Bitcoin, and (2.2) utility token for the purposes related to financial and investment services and speculation similar to financial products, ex., native token and governance token, etc. 

** Non-retail Investors refer to (1) institutional investors (II) and (2) qualified investors (QI), who are juristic persons or ordinary persons having investment assets such as derivatives and cash deposits at an total amount of not less than 50 million baht.   

*** Ultra-High Net Worth (UHNW) Investor Funds refer to (1) mutual funds for institutional investors or ultra-high net worth investors, who are juristic persons investing in derivatives and cash deposits, at a total amount of not less than 60 million baht (or not less than 30 million baht in case of ordinary persons) with knowledge or experience such as CFA, and (2) private funds for non-retail investors which manage investment in DA for institutional investors and UHNW.

**** Retail Funds refer to (1) mutual funds for retail investors (retail-MF), (2) mutual funds for accredited investors (AI Fund) for institutional investors and high net worth investors (HNW), who are juristic persons investing in securities, derivatives and cash deposits at a total amount of not less than 30 million baht (or not less than 15 million baht in case of ordinary persons) with knowledge and experience such as CFA, and (3) private funds for retail investors (PF for retail), which manage investment in DA for investors such as HNW and retail investors.