The Thailand Securities and Exchange Commission (SEC) has approved the country’s first spot Bitcoin (BTC) exchange-traded fund (ETF), a significant milestone in Thailand’s evolving cryptocurrency landscape.
This new investment product, however, is exclusively available to ultra high net-worth individuals (UHNWI) and institutional investors, reflecting the high-risk nature of the asset.
One Asset Management to launch ONE-BTCETFOF-UI
The SEC has given the green light to One Asset Management (ONEAM) to introduce the “ONE Bitcoin ETF Fund of Funds Unhedged and not for Retail Investors” (ONE-BTCETFOF-UI).
This ETF marks a strategic move to cater to Thailand’s wealthiest investors, providing them with a regulated avenue to invest in Bitcoin without directly holding the cryptocurrency.
High-risk rating underscores BTC volatility
According to the Bangkok Post, the ONE-BTCETFOF-UI has been assigned a risk score of eight, categorizing it as a high-risk investment.
This rating is primarily due to the notorious price volatility of Bitcoin and other crypto assets.
To mitigate these risks, ONEAM will invest in 11 global funds to ensure the ETF’s liquidity and security. This diversified approach aims to balance potential high returns with substantial risk management.
Thailand’s growing interest in cryptocurrencies
Thailand’s crypto market has seen significant growth and interest, especially during the COVID-19 pandemic.
As of 2022, approximately 12% of the Thai population had engaged in cryptocurrency transactions, driven by Bitcoin’s surge to an all-time high of Baht 2 million in 2021. At the time of writing, Bitcoin’s value has climbed to Baht 2.6 million, further fueling interest among investors.
In the realm of digital asset exchanges, Thailand boasts over 2.94 million user accounts, representing 4.27% of the population. This number surpasses half of the accounts on the country’s stock market, highlighting the shifting preference towards digital assets.
Tether remains the most popular cryptocurrency, accounting for over 40% of the trading volume, followed by Optimism and Perpetual Protocol.
Government support and regulatory environment
The Thai government has shown a supportive stance towards cryptocurrencies, viewing the sector as a potential driver for economic growth.
The adverse effects of COVID-19 on tourism and a slowdown in exports have pressured Thailand’s GDP, which grew by just 1.9% in 2023.
In response, the authorities are fostering a regulatory environment that attracts investors and startups, aiming to position Thailand as a hub for digital asset trading.
Significant regulatory changes have also been made to boost the sector.
In January, the Finance Ministry announced that digital asset trading would be exempt from value-added taxation (VAT). This move is intended to stimulate the crypto market by removing the 7% tax previously imposed on digital asset transactions.
Prime Minister’s pro-crypto stance and future prospects
Businessman Srettha Thavisin, who became Thailand’s prime minister in August 2023, has bolstered the focus on cryptocurrencies.
During his campaign, he pledged to distribute Baht 10,000 (approximately $280) via digital wallets to every Thai citizen aged 16 and above.
This initiative, although delayed, underscores the administration’s commitment to integrating digital financial solutions.
Srettha’s pro-crypto approach, coupled with a supportive regulatory environment, has attracted significant interest from global businesses.
In December, Binance announced a partnership with Gulf Innova to launch Binance TH, granting the Thai public full access to the crypto exchange.
This development marks the first time Binance has received a license in the region, signaling Thailand’s growing prominence in the global crypto market.
Financial institutions embrace Web3 technologies
Thailand’s largest banks, including Siam Commercial Bank, are increasingly exploring opportunities in the crypto sector.
This trend is indicative of the broader acceptance of blockchain and Web3 technologies within the financial industry. Such integration is expected to support the sector’s growth and innovation.
Cautious yet supportive regulatory framework
Thailand’s SEC plays a crucial role in overseeing the digital asset sector.
It ensures that businesses align with regulatory standards, particularly regarding anti-money laundering (AML) and counter-terrorism financing regulations.
Digital asset operators are required to obtain licenses and comply with local laws, including issuing risk disclaimers to protect investors.
In line with South Korea’s cautious approach, Thailand had initially refrained from allowing spot Bitcoin ETFs to protect its financial market and investors.
However, the recent approval for asset managers to offer these ETFs to institutional investors and UHNWIs marks a significant shift, reflecting the evolving regulatory landscape and growing confidence in digital assets.
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