Bitrabo Editorial
The Securities and Exchange Commission (SEC) of Thailand has granted approval to One Asset Management (ONEAM) to introduce the first spot Bitcoin exchange-traded fund (ETF) in the country, marking a significant milestone in Thailand’s financial landscape. The ETF will target affluent and institutional investors, underscoring a cautious approach towards retail investor involvement.
Thailand joins the Trend of Approving Spot Bitcoin ETFs
The approved ETF is scheduled for release between May 31 and June 6 and carries a risk rating of eight, indicating a high-risk profile. The ONE Bitcoin ETF will diversify its investments among 11 prominent global BTC funds to ensure liquidity and security.
These underlying funds have undergone scrutiny by regulatory bodies in the United States and Hong Kong. ONEAM’s CEO, Pote Harinasuta, remarked, “Digital assets serve as an alternative investment with minimal correlation to traditional financial assets, offering investors a diversification strategy for risk management.”
This authorization aligns with a global trend as seen with approvals by the US SEC and Hong Kong’s Securities and Futures Commission for spot BTC ETFs. The international recognition likely influenced Thailand’s SEC, highlighting the increasing acknowledgment of Bitcoin ETFs as a mainstream investment avenue.
Bitcoin’s market cap currently stands at $1.4 trillion, compared to gold’s $14 trillion, indicating significant growth prospects due to Bitcoin’s finite supply of 21 million coins. Harinasuta stated, “Despite the limited supply of Bitcoin, its popularity is rising, leading to substantial growth potential for the cryptocurrency.”
Over the last 11 years, BTC has demonstrated an average annual return of 124%, with yearly volatility averaging 83%. Harinasuta emphasized, “Investing in Bitcoin can offer lucrative returns but is accompanied by high volatility.”
ONEAM recommends allocating up to 5% of portfolios to BTC, projecting an average annual return of 8.90% with a Sharpe ratio of 0.71 and a maximum drawdown of -22.4%. In comparison, a portfolio without BTC would yield an average return of 5.80% annually, with a Sharpe ratio of 0.48 and a maximum drawdown of -20.4%.
A notable aspect of the ONE Bitcoin ETF is its emphasis on coin storage security. Harinasuta highlighted the criticality of secure storage, referring to past incidents of data loss and theft linked to direct BTC investments.
Harinasuta explained, “Direct investment in Bitcoin through various platforms carries risks, such as data loss or theft of digital assets. The ETF mitigates these risks by employing custodians following institutional standards, ensuring offline storage for enhanced security.”
The Thai SEC’s approval addresses the rising demand from local institutions for regulated BTC investment options, aligning Thailand with other jurisdictions like the US, Hong Kong, Australia, and the UK that have earlier embraced regulated Bitcoin investment products.
While ONEAM has secured its position as the pioneer in offering a spot ETF, MFC Asset Management awaits regulatory clearance for its ETF. The competitive landscape in Thailand’s nascent spot Bitcoin ETF market will be closely monitored as more entities aim to tap into the escalating institutional interest in digital assets.
At the time of reporting, BTC was trading at $69,045.