Thai Investors Denied Access To US Spot BTC ETF

The approval of 11 spot Bitcoin exchange-traded funds (ETFs) doesn’t seem to having the domino effect it was expected to, with Thailand's financial watchdog publicly stating that domestic investors will not be allowed to invest in these products directly today, 17 January 2024.

Thai SEC unphased by ETF decision

The United States Securities and Exchange Commission (SEC) recently approved spot Bitcoin (BTC) ETFs for the first time, marking a historical milestone in the adoption of cryptocurrencies and digital assets.

However, the Thai SEC doesn’t share in that sentiment. Following the approvals, there was an outcry from Thai securities brokers, firms, and other investors, urging the Thai SEC for permission to invest in US-based spot Bitcoin ETFs.

Per today's 17 January post from local media outlet, Bangkok Post, the Thai SEC has been closely monitoring the moves of its US counterpart but will be denying spot Bitcoin ETF trading in the country due to a lack of policies, writing: "The SEC has been following these developments closely but we do not have a policy to allow spot Bitcoin ETFs to be established in Thailand for the time being.”

The SEC reminded investors that under the Digital Assets Decree, there are exchanges where people can purchase and trade cryptocurrencies. At present, nine licensed exchanges offer crypto/Bitcoin investment products and services in Thailand.

With no intentions of allowing investment firms to launch spot BTC ETFs, the Thai SEC also noted: "Securities companies can provide services to retail customers to invest in foreign products, but they must have the same characteristics as products that can be offered for sale in Thailand."

Though the Thai SEC’s response may come off as misguided, many regulators around the world are also observing the spot BTC ETF markets closely, and will likely be basing any future decisions on their performance. 

The Thai SEC says it will continue to monitor these developments and their broader impacts in order to “further develop policy guidelines”, which may suggest they are less skeptical of spot Bitcoin ETFs than is perceived.

Thailand’s crypto landscape

In terms of crypto usage and adoption, Thailand is surprisingly one of the most active crypto countries in the world, ranking tenth globally according to the 2023 Chainalysis Global Crypto Adoption Index. This is due to its total user activities on centralized exchanges, decentralized finance (DeFi) platforms, and peer-to-peer (P2P) trading activity.

Since 2014, Thailand has been steadily introducing the necessary legislation and regulatory frameworks to manage the rise of cryptocurrencies in the nation. 

Following the 2017/2018 market rush caused by initial coin offerings (ICOs), Thailand took major steps to bring regulatory clarity and legitimacy to crypto, publishing a set of proposed regulatory guidelines for “ICOs, and the operations of digital asset exchanges, brokers and dealers.”

This comprehensive framework let the Thai government focus on building security and trust in its domestic crypto ecosystem, with several measures introduced such as mandatory anti-money laundering (AML) and know-your-customer (KYC) policies for licensed crypto operators.

In 2020, the Thai SEC then proposed a minimum capital requirement for exchanges, requiring them to have a minimum registered capital of $1.6million and a $1m digital asset operation fund.

Following the market collapse of 2021, the Thai SEC came down heavily on crypto in June, banning memecoins such as Dogecoin, as well as other altcoins such as NFTs, social tokens, and utility tokens, forcing domestic exchanges to delist the coins within 30 days. 

In July 2023, the securities watchdog would introduce further guidelines to digital asset service providers, namely exchanges, banning them from providing lending and staking services 

Interestingly, Thailand doesn’t recognize digital assets as lawful currencies and therefore doesn’t allow businesses to accept cryptocurrencies for the products or services they offer. This is due to concerns with a potentially spiraling effect where price volatility could leak into the traditional economy in Thailand.

Binance Thailand

On 16 June 2023, major cryptocurrency exchange Binance commenced trading operations in Thailand following the firm obtaining a digital asset exchange license from the Thailand Ministry of Finance in May 2023.

The introduction of Binance, amongst other major exchanges now operating in Thailand, could suggest that market watchdogs are leaning on proven technologies, entities, and companies that can comply with their regulatory frameworks, to essentially test the impacts of these implementations.

Though a Thai-based spot Bitcoin ETF may not be in immediate view, Thailand remains one of the biggest emerging markets in crypto today.