In a groundbreaking development, Thailand’s Securities and Exchange Commission (SEC) has approved the country’s first spot Bitcoin exchange-traded fund (ETF).
This move marks a significant step forward in the mainstream adoption of bitcoin within Thailand and aligns with a global trend of increasing regulatory acceptance of the scarce digital asset.
The ETF, named the “ONE Bitcoin ETF Fund of Funds Unhedged and not for Retail Investors (ONE-BTCETFOF-UI)”, is spearheaded by One Asset Management (ONEAM) and is set to be available from May 31 to June 6.
The Thai SEC has restricted access to the ONE Bitcoin ETF to wealthy and institutional investors, reflecting a cautious approach towards retail investors due to the high-risk associated to bitcoin because of its dollar-price volatility.
The regulatory body highlighted that this ETF comes with an investment risk level of eight. The focus on affluent and institutional investors aims to ensure that those engaging with this financial product have the resources and risk tolerance to handle potential fluctuations in bitcoin’s value.
ONEAM has been endorsed as the first firm to launch a spot Bitcoin ETF in Thailand. Pote Harinasuta, the CEO of ONEAM, emphasized the benefits of digital assets for portfolio diversification. He stated:
“Digital assets are an alternative asset that have a low correlation with other financial assets. They are suitable to help investors diversify investment risks.”
Harinasuta highlighted bitcoin’s impressive average annual return of 124% over the past 11 years, though this comes with a high volatility rate of 83%. To manage these risks, ONEAM recommends that investors limit their bitcoin exposure to about 5% of their portfolios.
This allocation aims to achieve a balanced return of approximately 8.9% per year. Harinasuta noted that despite the potential for high returns, the inherent volatility requires a cautious investment approach.
“Although the supply of Bitcoin is limited at 21 million, demand is rising as it gains popularity. We see high growth potential for Bitcoin,” he added.
The fund’s structure is designed to provide investors with a secure and regulated avenue to gain exposure to bitcoin. This approach includes adhering to international standards for coin storage, with reviews conducted by regulatory agencies in the US and Hong Kong.
Harinasuta underscored the importance of security in bitcoin investments. He highlighted:
“Investing in Bitcoin directly through various platforms contains risks, with past problems including data loss or stolen digital assets via the online system.”
By investing through ETFs, holders’ data and coins will be stored offline by custodians, offering protection against such risks.
While ONEAM has secured approval for its Bitcoin ETF, another Thailand-based firm, MFC Asset Management, is still awaiting regulatory clearance for its own Bitcoin ETF product.
MFC’s investment product, like ONEAM’s, will also target wealthy and institutional investors.
This indicates a growing interest among Thai asset management firms to offer regulated Bitcoin investment vehicles, following the global trend of increased regulatory support for the digital asset.
Thailand’s approval of its first Bitcoin ETF is part of a broader global trend towards embracing bitcoin investment vehicles. Earlier this year, the US SEC approved the creation of funds that invest directly in spot bitcoin through ETFs.
This move has been mirrored by regulatory bodies in other regions, including Hong Kong, Australia, and the UK, which have also permitted the establishment of Bitcoin ETFs.
The Thai SEC’s decision came after amending local rules in April to allow asset management firms to launch private funds offering Bitcoin ETFs, but only to professional investors.
This regulatory shift reflects growing institutional confidence in Bitcoin, signaling a maturing market.
The approval of the ONE Bitcoin ETF is expected to have wide-reaching implications for both the local and global markets. By providing a regulated and accessible way to invest in bitcoin, the ETF is likely to attract more institutional investors.
This influx of institutional capital could drive further growth and stabilization in the market, enhancing Bitcoin’s legitimacy as an investment asset.
Thailand’s move also positions it alongside other countries that have embraced Bitcoin ETFs, contributing to the global momentum towards regulated bitcoin investments.
As more jurisdictions approve such financial products, the market for Bitcoin is expected to expand, offering investors new opportunities to diversify their portfolios and potentially achieve high returns.
