WISE RECAP - CAPITAL MARKETS REGULATORY UPDATES FOR Q1/2025

Highlights

1. Easier Access to Digital Assets via Traditional Funds

• What Changed:
  Securities firms and asset managers no longer need a separate digital asset fund manager license to manage crypto or investment token portfolios.
• Why It Matters:
  • Opens doors for more traditional players to enter digital asset space
  • Makes it easier for investors to access crypto via trusted channels
  • Boosts growth of Thailand’s investment token ecosystem

2. Mutual Funds & Crypto: New Investment Rules

Effective: 16 January 2025

Key Rules:

• Investment tokens now treated like stocks/bonds (same limits)
• Ultra-High Net Worth (UHNW) Funds
  • Can invest in crypto ETFs with no limit
  • Can hold crypto directly, capped at 20% of Net Asset Value (NAV)
• Retail Funds (New)
  • Up to 5% NAV exposure to crypto via ETFs or foreign funds

3. New Rules for NC Bonds (Net Capital Bonds)

Effective: 1 February 2025

What’s New:

• NC Bonds must meet updated “subordinated liabilities” standards
• Plain Vanilla Bonds ❌ cannot:
  • Defer/cancel payments
  • Be converted or written off
  • Carry complex features

Goal:

• Strengthen financial stability
• Improve transparency in fund calculations for securities businesses

👥 Who Benefits from These Updates?

• Investors seeking crypto exposure through traditional funds
• Asset managers expanding into digital asset space
• Securities firms issuing capital instruments
  
  

————————————————————

In these series of quarterly regulatory updates, Wise Equity Legal Counsel Limited aims to bring to your attention key developments of the relevant rules and regulations in the Thai capital markets and digital asset landscape. Here is our recap for the first quarter of 2025:

1. Amendment of regulation related to the exemption of securities companies and asset management companies from obtaining digital asset fund manager license

The Securities and Exchange Commission of Thailand (the “SEC”) has issued the Notification of the Securities and Exchange Commission No. KorThor 1/2568 Re: Determination of Fund Management Activities Not Deemed to be Digital Asset Fund Management Business (No. 2), which takes effect on 16 March 2025. This regulatory update aims to enhance investor access to investment tokens in both the primary and secondary markets through traditional financial institutions, helping to strengthen the overall investment token ecosystem and to promote greater flexibility and diversification in investment strategies for mutual funds and private funds, as well as serving as a key mechanism for fostering the growth of investment tokens in Thailand’s capital markets.
Under this amendment, security companies and asset management companies that already hold licenses of mutual funds or private funds management are exempt from the requirement to obtain a digital asset fund manager license under the Emergency Decree on Digital Asset Businesses B.E. 2561 (2018), provided they engage in digital asset investment management of mutual funds or private funds. In this regard, security companies and asset management companies benefiting from this exemption will nonetheless remain subject to existing securities regulations.

2. Amendment of regulations on investment in digital assets by mutual funds and private funds

The SEC has amended the regulations on investment in investment token and crypto assets, i.e., cryptocurrency and utility tokens, by mutual funds and private funds. The amendment, which takes effect on 16 January 2025, aims to foster fair competition among businesses of the same types, support asset allocation for investors through professional fund managers, and enhance flexibility in investment management for security companies and asset management companies. Material revisions are as follows:

1. Investment tokens will be classified as eligible investment assets for funds, subject to the same investment ratio limits as transferable securities such as stocks and bonds, due to their similar characteristics and risk profiles.

2. Funds will be allowed to invest in crypto assets under appropriate risk controls and conditions based on investor types as follows:

1. Funds for ultra-high net worth investors may invest in crypto exchange traded funds without any limitation on investment proportion or may directly invest in crypto assets, provided that such direct investment is limited to no more than 20% of the net asset value.
2. Newly established funds for retail investors with an active management strategy, i.e., mixed funds, equity funds, or alternative investment funds, may have total crypto asset exposure through exchange traded funds or foreign investment funds of no more than 5% of the net asset value, for the purpose of asset allocation by professional fund managers.

3. The establishment and management of funds investing in digital assets, including asset custody, disclosure requirements, advertising, and suitability testing, were also amended to ensure they adequately cover investments in crypto assets.

3. Amendment of regulations related to the issuance and offering of net capital bonds (the “NC Bonds”) and the amendment of the use of proceeds

The SEC has amended the regulations on the issuance and offering of subordinated instruments by securities or derivatives business operators (the “Business Operators”), which include conditions for the deferral or cancellation of interest payments and the deferral of principal repayment. The amendment, which takes effect on 1 February 2025, aims to support the revised definition of subordinated liabilities that are excluded from total liabilities in the calculation of the Business Operator’s capital fund. The key points of the amendment are summarized below: 

1. Criteria for the approval of the issuance and offering of NC Bonds were aligned with the definition of subordinated liabilities that are excluded from total liabilities in the calculation of the operator’s capital fund, which is in addition to the criteria for the approval of the issuance and offering of general debt instruments (the “Plain Vanilla Bonds”) such as mandatory submission of a license application for all types of offerings, credit rating, additional disclosure of general debt instruments, and ongoing disclosure of capital fund information. 
2. Plain Vanilla Bonds are prohibited from including terms that allow the issuer to defer or cancel payments, write down value, write off debt, or force conversion. These features are reserved for complex, higher-risk instruments such as NC Bonds.
   
   
   

————————————————————

For more in-depth information on any of the above, please reach out to Karinevidch Olivero at
karinevidch.o@wiseequitylegal.com or Noraseth Ohpanayikool at noraseth.o@wiseequitylegal.com or Yanika Apisaksirikul at yanika.a@wiseequitylegal.com