Woofun AI reports that Thailand's Securities and Exchange Commission (SEC) has elevated its framework for locally listed spot Bitcoin and Ether exchange-traded funds (ETFs) from proposed principles to draft regulations, simultaneously revising guidelines for foreign digital asset custodians.

The regulator announced on Monday that it is soliciting feedback on two consultation papers: one containing draft regulations for Thai crypto ETFs and another outlining principles for foreign digital asset custodians serving mutual and private funds. During the initial phase, asset managers may establish passive ETFs tracking Bitcoin (BTC) or Ether (ETH), the only two eligible crypto assets. These draft regulations follow an April consultation on the framework's broader principles, where most respondents supported the structure but raised concerns regarding custody arrangements. This feedback prompted the SEC to revise its approach, aligning with Thailand's ambition to become a global digital asset hub for institutions.

Under the proposed rules, Bitcoin and Ether ETFs must trade exclusively on the Stock Exchange of Thailand (SET). Each fund is required to track a single crypto asset and maintain an average net exposure of at least 80% of its net asset value to that asset over each accounting year. The rules also permit mutual funds and private funds to invest in Thai-domiciled crypto ETFs alongside foreign crypto ETFs, subject to existing investment limits.

However, the regulator will not allow alternative products tied to foreign crypto ETFs, such as depositary receipts, during this initial phase.

Woofun AI data shows the revised custody framework retains onshore digital asset custodians as primary providers for crypto ETFs initially. The SEC may permit qualified foreign DA custodians when necessary and appropriate given prevailing circumstances. For mutual and private funds, foreign providers must be supervised by a regulatory authority with legal powers and adhere to regulatory and investor asset protection standards deemed adequate by the Thai SEC.

Public comments on both consultation papers will be accepted until Sept. 20.