Thailand has taken its first tentative steps into the world of Bitcoin by launching a unique exchange-traded fund (ETF) aimed at wealthy individuals and institutions. This comes amid a global surge in interest in cryptocurrencies, but Thai regulators are taking a cautious approach, prioritizing security and controlled access for beginners.
Confined access for a privileged few
The Securities and Exchange Commission (SEC) bowed to the matter ONE Bitcoin ETF fund non-hedge funds offered by One Asset Management (ONEAM), the Thailand-based Bangkok Post revealed on Tuesday. Unlike classic ETFs available to the general public, this one has a high barrier to entry.
Only accredited investors, a category that includes institutions and wealthy individuals, can participate in the competition. This narrow access reflects a common theme in Asia, where regulators are taking a measured approach to Bitcoin. While China has responded strongly, others such as South Korea and Japan have implemented stricter know-your-customer (KYC) regulations and cryptocurrency exchange listing requirements.
Safety first: Bitcoin wrapped in a safety net
ONEAM ETF offers a change from the typical investment model. Instead of owning the best cryptocurrencies directly, the fund invests in a basket of 11 recognized global Bitcoin funds. The purpose of this “fund of funds” structure is to reduce the risks associated with individual trading platforms, which have historically struggled with issues such as data breaches and digital asset theft.
BTCUSD trading at $68,940 on the 24-hour chart: TradingView.com
Additionally, the ETF emphasizes secure custody practices, using international standards and custodians used by institutional investors. These guardians store Bitcoin offline, significantly reducing vulnerability to online attacks.
Diversification fun
For accredited investors, Bitcoin’s appeal lies in its potential to diversify portfolios. The coin’s price movements tend to have low correlation with classic assets such as stocks and bonds. This means that including a diminutive BTC allocation can support reduce the overall volatility of your portfolio.
Despite the potential benefits, KNOT recognizes the inherent risks of investing in cryptocurrencies. Bitcoin’s history is characterized by high volatility and significant price fluctuations. To manage this risk, ONEAM recommends a cautious approach, suggesting investors allocate only 5% of their portfolio to Bitcoin.
A balanced step forward for Thailand
Thailand attack on Bitcoin ETFs represents a calculated move by regulators. It acknowledges the growing interest in cryptocurrency, but the priority is to protect less sophisticated investors. Restricted access and a focus on secure storage reflect this cautious approach.
This contrasts with the situation in some other Asian markets such as Hong Kong, which recently approved ETFs investing directly in both Bitcoin and Ethereum, potentially opening the door to a wider range of investors.
Featured image from Pastel, chart from TradingView
