Thailand’s SEC Proposes New Rules for Institutional Investment in Digital Assets

Thailand’s SEC Proposes New Rules for Institutional Investment in Digital Assets

The Thailand Securities and Exchange Commission (SEC) has proposed new rules that would permit mutual and private funds to invest in digital assets, aligning with international developments.

The proposed changes aim to establish a regulatory framework that permits securities companies and asset management firms to provide services to large investors who want to diversify their portfolios with crypto-related products, such as exchange-traded funds (ETFs).

The SEC has solicited public feedback on the draft proposal, which includes updated criteria for funds investing in digital assets. According to the regulator, it is important to distinguish between high-risk assets like Bitcoin and stablecoins like Tether, while also recognizing the inherent risks and characteristics of each type of digital asset.

As a result, the proposed regulations will mandate fund managers to fulfill “fiduciary duty in selecting appropriate investment channels” and managing the associated risks. The proposal mandates that fund managers carry out extensive due diligence and risk assessments before investing in digital assets for their clients.

Additionally, the proposal establishes specific limits on digital asset exposure for different fund types. For example, retail mutual funds will have a maximum of 15% of their exposure to crypto investments. The aim of this is to shield individual investors from excessive risk-taking while still allowing them the opportunity to reap the potential returns offered by digital assets.

In contrast, institutional and ultra-high-net-worth investors will not be subjected to any restriction on their exposure to digital asset classes. However, they will be required to diversify their portfolios to manage risk. The approach acknowledges the sophistication and risk tolerance of these investors, but emphasizes that they must be cautious when investing.

The proposed regulations also address the issue of holding digital assets like Bitcoin or Ethereum for a limited period of five business days, as suggested by the SEC. This provision is intended to prevent fund managers from engaging in excessive speculation or market manipulation.

The Thai SEC’s decision is viewed as a response to the growing interest in digital assets among institutional investors. In recent years, several major investors, including hedge funds and pension funds, have entered the digital asset space, attracted by the prospect of diversification and returns.

In light of this trend, the SEC’s proposal aims to create a regulatory environment that fosters innovation and investor protection. The development comes as other countries are also taking steps to regulate digital assets. Likewise, regulators in Europe are exploring ways to establish a uniform regulatory framework for digital assets.

The Thai SEC has released its proposal for public comment until November 8, at which point the regulator will review the feedback and finalize the rules. The move is expected to have a significant impact on the digital asset industry in Thailand, as it will allow institutional investors to capitalize on this emerging class of technology.

Although the proposal does not offer specific guidance on how digital assets may be invested, it acknowledges the growing significance of this type of asset in the global economy. The digital asset industry in Thailand is poised to grow sustainably thanks to the Thai SEC’s regulatory framework that fosters innovation and protects investors.

For more information on the regulation of digital assets, check out this article on CoinSeeks.com: Digital Asset Regulation: What You Need to Know.