Thailand has advanced its efforts to introduce spot bitcoin and ethereum exchange-traded funds (ETFs) by releasing draft rules for adoption.

On Aug. 25, Cointelegraph reported that the Thai Securities and Exchange Commission (SEC) published two consultation documents: a draft rulebook for local cryptocurrency ETFs and qualification standards for overseas digital asset custodians. The draft elevates an April consultation on basic principles to detailed regulations.

Initial approval is limited to bitcoin and ethereum. Asset managers can launch passive ETFs that track the prices of the two assets. Each ETF must include only a single cryptocurrency and maintain an average net exposure to that asset of at least 80 percent of net asset value over the fiscal year.

Trading will take place only through the Thai SEC. Mutual funds and private funds can invest in crypto ETFs approved by regulators. Existing investment in overseas crypto ETFs that had already been allowed can continue within set limits.

Thailand will not allow alternative products designed based on overseas crypto ETFs in the early stage of the system’s rollout. Depositary receipts that track overseas ETFs are also excluded.

The custody framework is a key issue in the discussions. In principle, local crypto ETFs must designate a Thailand-based digital asset custodian as the main custodian. If necessity and appropriateness are recognised given market conditions, they can also use qualified overseas custodians.

Separate standards were also presented for overseas custodians. Overseas custodians involved in digital asset investment by mutual funds and private funds must be supervised by a regulator with legal authority. The country’s regulatory framework and investor asset-protection standards must also be sufficient for Thailand’s securities authorities to recognise.

The plan aligns with Thailand’s push to build a digital asset hub centered on institutional investors. It aims to open the local listed ETF market while prioritising stable adoption by gradually limiting the trading market, eligible underlying assets, product structure and custodians. The decision to allow only bitcoin and ethereum first and exclude products linked to overseas ETFs also reflects that direction.

The consultation runs through Sept. 20. Thai authorities plan to finalise the rules by reflecting feedback from market participants. The spot crypto ETF framework is expected to take shape by setting both the scope of approval and custody standards.