Thailand has taken its first tentative steps into the world of Bitcoin with the launch of a unique exchange-traded fund (ETF) aimed at high net-worth individuals and institutions. This comes amidst a global surge in interest in cryptocurrencies, but with Thai regulators taking a cautious approach, prioritizing security and controlled access for beginners.
Limited Access For The Privileged Few
The Securities and Exchange Commission (SEC) has given its nod to the ONE Bitcoin ETF Fund of Funds Unhedged, offered by One Asset Management (ONEAM), Thailand-headquartered daily Bangkok Post disclosed, Tuesday. Unlike traditional ETFs accessible to the general public, this one comes with a hefty entry barrier.
Only accredited investors, a category encompassing institutions and wealthy individuals, can participate. This restricted access reflects a common theme in Asia, where regulators are taking a measured approach to Bitcoin. While China has cracked down heavily, others like South Korea and Japan have implemented stricter know-your-customer (KYC) regulations and listing requirements for crypto exchanges.
Security First: Bitcoin Wrapped In A Safety Net
The ONEAM ETF offers a twist on the typical investment model. Instead of directly holding the top crypto, the fund invests in a basket of 11 well-established global Bitcoin funds. This “fund-of-funds” structure aims to mitigate risks associated with individual trading platforms, which have faced issues like data breaches and stolen digital assets in the past.
Furthermore, the ETF emphasizes secure storage practices, employing international standards and custodians used by institutional investors. These custodians store Bitcoin offline, significantly reducing the vulnerability to online attacks.
A Diversification Play
For accredited investors, the allure of Bitcoin lies in its potential to diversify their portfolios. The coin’s price movements tend to have a low correlation with traditional assets like stocks and bonds. This means that including a small allocation of BTC can help reduce overall portfolio volatility.
Despite its potential benefits, the SEC acknowledges the inherent risks of investing in crypto. Bitcoin’s history is marked by high volatility, with significant price swings. To manage this risk, ONEAM recommends a cautious approach, suggesting investors allocate only 5% of their portfolio to Bitcoin.
A Measured Step Forward For Thailand
Thailand’s foray into Bitcoin ETFs represents a calculated move by regulators. It acknowledges the growing interest in cryptocurrency but prioritizes protecting less sophisticated investors. The limited access and focus on secure storage reflect this cautious approach.
This stands in contrast to some other Asian markets, like Hong Kong, which recently approved ETFs that directly invest in both Bitcoin and Ethereum, potentially opening the doors to a wider range of investors.
Featured image from Pastel, chart from TradingView
