Thailand’s Securities and Exchange Commission has moved its framework for locally listed spot Bitcoin and Ether exchange-traded funds from proposed principles to draft regulations while also revising its approach to foreign digital asset custodians. The regulator said Monday that it is seeking feedback on two consultation papers, one covering draft rules for Thai crypto ETFs and the other outlining qualification principles for foreign digital asset custodians used by mutual and private funds investing in digital assets. According to Cointelegraph, the initial phase would allow asset managers to launch passive ETFs tracking Bitcoin (BTC) or Ether (ETH), the only two eligible crypto assets, as Thailand continues working toward its goal of becoming a global digital asset hub for institutions.

Under the proposed rules, Bitcoin and Ether ETFs would trade exclusively on the Stock Exchange of Thailand (SET), with each fund tracking a single crypto asset. The ETFs would need to maintain average net exposure of at least 80% of their net asset value to that asset over each accounting year. The proposal would also allow mutual funds and private funds to invest in Thai-domiciled crypto ETFs, in addition to foreign crypto ETFs they are already permitted to hold, subject to existing investment limits. However, during the initial phase, the regulator would not allow alternative products linked to foreign crypto ETFs, including depositary receipts that track them. The SEC said the draft regulations follow an April consultation on broader principles, and that most respondents supported the framework while raising concerns about custody arrangements, prompting revisions to the proposed approach.

The SEC’s revised custody proposal would keep onshore digital asset custodians as the primary providers for crypto ETFs during the initial phase. The regulator said crypto ETFs will continue to be primarily required to use onshore DA custodians, while qualified foreign DA custodians may be permitted when necessary and appropriate in light of prevailing circumstances. Under the separate custodian proposal, foreign providers serving mutual and private funds investing in digital assets would need to be supervised by a regulatory authority with legal powers and operate under regulatory and investor asset protection standards that the Thai SEC considers adequate. The SEC said it will accept public comments on both consultation papers until Sept. 20.