Thailand has initiated its initial forays into the realm of Bitcoin through the introduction of an exclusive exchange-traded fund (ETF) designed for affluent institutions and individuals
This development coincides with a worldwide upswing in attention towards cryptocurrencies; however, Thai regulatory bodies adopted a prudent stance, emphasizing security measures and supervised entry for novices.
Access Restricted To The Privileged Few
According to information released Tuesday by the Bangkok Post, a newspaper based in Thailand, the Securities and Exchange Commission (SEC) has approved the ONE Bitcoin ETF Fund of Funds Unhedged Unhedged, offered by One Asset Management (ONEAM). This ETF, in contrast to conventional ETFs open to the general public, has a substantial entry barrier.
Participation is restricted to accredited investors, which includes accredited institutions and affluent individuals. The limitation on access exemplifies a prevalent trend in Asia, where regulatory bodies adopt a prudent stance towards Bitcoin. While China has imposed severe penalties, South Korea and Japan have mandated that cryptocurrency exchanges adhere to more stringent listing requirements and know-your-customer (KYC) policies.
Ensuring Security: Bitcoin Encased In A Safety Net
On the contrary, the ONEAM ETF presents an alternative investment framework. Instead of possessing the leading cryptocurrency directly, the fund allocates its investments into a basket comprising eleven reputable global Bitcoin funds. This “fund-of-funds” framework aims to alleviate the risks linked to specific trading platforms, which have previously encountered challenges such as data breaches and the theft of digital assets.
In addition, the ETF prioritizes secure storage procedures, utilizing custodians and international standards utilized by institutional investors. By storing Bitcoin offline, these custodians substantially reduce the cryptocurrency’s susceptibility to online attacks.
A Play on Diversification
Accredited investors are drawn to Bitcoin because it can enhance portfolio diversification. The price fluctuations of the coin exhibit a generally weak correlation with conventional assets such as equities and bonds. This indicates that a modest allocation to Bitcoin can assist in reducing the overall volatility of a portfolio.
While crypto investments may offer prospective advantages, the SEC recognizes their inherent risks. A substantial price swing has characterized Bitcoin’s history of high volatility. To mitigate this risk, ONEAM advises investors to adopt a prudent stance by allocating 5% of their investment portfolio to Bitcoin.
A Sophisticated Advancement for Thailand
The entry of Thai regulators into Bitcoin ETFs is a calculated move. While recognizing the increasing attention towards cryptocurrencies, its primary focus is safeguarding investors with lower levels of expertise. Due to this prudent approach, access is restricted, and secure storage is emphasized.
This is in opposition to certain alternative Asian markets, such as Hong Kong, which recently granted authorization for exchange-traded funds (ETFs) that invest directly in Bitcoin and Ethereum, thereby potentially expanding the investor base.