Thailand's rules for bitcoin and ether exchange-traded funds take effect on October 16, with one restriction that separates the Thailand crypto ETF market from others: brokers cannot offer margin loans to clients buying the products.
The Securities and Exchange Commission finalized 11 notifications on October 9, limiting the first wave of crypto ETFs to bitcoin and ether. Funds must maintain average net exposure of at least 80% of net asset value to the underlying crypto asset over each accounting year. They will trade exclusively on the Stock Exchange of Thailand.
The margin loan prohibition means investors must pay for Thailand crypto ETF shares entirely with their own capital. Securities firms are barred from extending credit against those holdings. That approach contrasts with Hong Kong, where the Securities and Futures Commission announced in February that brokers may accept bitcoin and ether as collateral for margin financing.
Custody and Investor Protection
Funds must use digital asset custodians supervised by Thailand's SEC, though overseas custodians may be permitted when the regulator considers it necessary. Asset managers may outsource services only to licensed digital asset fund managers.
Investors must acknowledge the risks of crypto ETFs before trading. The SEC said it wants to avoid excessive concentration in digital assets and match investments to each investor's risk tolerance. Custody requirements under Thailand's framework mirror stricter global standards emerging across jurisdictions.
Foreign Products Restricted
During the initial phase, issuing or offering depositary receipts linked to foreign crypto ETFs is prohibited. Securities firms may not arrange foreign crypto ETF investments for clients outside the institutional and ultra-high-net-worth categories.
Thai mutual funds and private funds may now buy locally listed crypto ETFs. Previously they could invest only in foreign crypto ETFs, and existing investment limits still apply.
Timeline and Launch Prospects
The rules follow public hearings in April, May, August, and September. The SEC said most respondents supported the framework. The regulator announced in January that it had approved crypto ETFs in principle and was finalizing operating rules.
Thailand's approach prioritizes local products and limits borrowed capital, while Hong Kong has moved to integrate crypto assets into traditional margin financing. The October 16 effective date does not guarantee immediate launches. The SEC has not named any asset manager that has applied to list a Thailand crypto ETF.