The Thai SEC has unveiled measures to enable mutual and private funds to invest in cryptos. This action brings Thailand closer to following global trends and responds to institutional investors’ growing demand for cryptocurrencies. The draft proposal regarding the new parameters for such investments was to be released on Wednesday.
Public Feedback Sought on Digital Asset Investment Proposal
The SEC published its Public Proposal to get the public’s feedback on its intention to change the criteria for funds that want to invest in digital assets. The changes bring new possibilities for securities companies and asset management firms.
These firms could also provide services to other big investors interested in product diversification options with cryptocurrencies, such as exchange-traded funds(ETFs). The stated amendments are to equip Singapore with international tendencies in digital assets and to provide investors with an opportunity for diversified investments managed by professionals.
International Influenced Regulations
The SEC draws attention to the growing demand for the US-listed Bitcoin and Ethereum ETF that started trading earlier this year. These changes have made institutional investors demand updates, which has caused the Thai SEC to reconsider its regulation of mutual funds, which had not been changed since 2015.
Thai investors can only be exposed to crypto ETFs through cross-border investment. However, the SEC wants to establish a more favourable domestic environment for mutual funds investing in digital assets. The commission aims to harmonize Thai laws with the continuously changing international best practices to enable investors more choices under the laws of a more developed and comprehensive jurisdiction.
Difference Between High Risk and Stable Assets
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Amid proposals for the new set of regulations is the segregation of cryptocurrencies, such as Bitcoin, as high-risk and other cryptocurrencies, such as Tether, as relatively stable. Stablecoins, which are secure to a stable asset, are less risky than the more popular risky coins, such as Bitcoin.
Managers of such funds will be under pressure to perform their fiduciary responsibilities, ensure adequate asset diversification, and select funds based on their clients’ risk propensity and investment objectives. This part of the proposal further bolsters investor protection as envisioned by the SEC while promoting the expansion of participation in the digital assets market.
Some Restriction in Investment on Digital Assets for Funds
Retail mutual funds will be restricted from investing in cryptocurrency to a maximum of 15%, as posted in the proposed rules. At the same time, institutional and ultra-high-net-worth investors, who are classified as more knowledgeable investors, will not have a limit on how much exposure they can have to crypto. Nevertheless, such funds will also be necessary to invest in other assets to hedge risks connected with high cryptocurrency volatility.
The proposal also provides a short-term holding position for tokens such as Bitcoin and Ethereum. Fund managers can hold such assets for five business days, principally on commerce grounds. The short holding period also means funds can manage market swings to minimize risk levels.
Final Regulations Expected Next Year
The SEC has commended the proposal for public consultation, with the public having until November 8 to comment. The accrued feedback will inform the final remaining regulations, which are planned to be developed sometime next year. If implemented, these new rules may redefine Thai investors’ approach to digital assets since they open the path for moving to the crypto sphere in a safer and regulated manner.
Thailand’s action regarding mutual funds opening up for digital asset investment is not an isolated phenomenon in the contemporary global economy. With many people expressing interest in crypto products, global regulatory bodies seek to capitalize on this by creating room while covering all probable risks and losses.
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