SEC Updates Regulations on Digital Asset Investments for Mutual and Private Funds

The SEC has amended regulations for Funds investing in digital assets to ensure fairness, support asset allocation, and provide flexibility for asset management companies, effective immediately.

Bangkok, 16 January 2025 – The Securities and Exchange Commission (SEC) has revised regulations governing mutual funds and private funds (Funds) investing in digital assets*. The updates aim to promote fairness in providing foreign investment opportunities to high-net-worth investors through securities and asset management companies while supporting fund managers in optimizing asset allocation. The revised regulations are effective immediately.

 The SEC has issued 13 notifications concerning the amendments** with key points as follows: 

(1) Adding Investment Token as an eligible asset for investment with an investment limit similar to that of transferable securities such as stocks and bonds because of similar characteristics and risks;

(2) Allowing the Funds to invest in crypto assets under a risk level appropriate for the types of investors. For the Funds targeting ultra-high net worth investors***, they would be allowed to invest in crypto ETFs without any investment limit in order to create equal competition between securities companies and asset management companies. In the case where such Funds invest in crypto assets directly or indirectly via derivatives, the investment must be capped at 20 percent of the NAV.

Meanwhile, the Funds for retail investors**** would be allowed to have total crypto asset exposure through ETFs or foreign mutual funds, capped at 5 percent of the NAV, for the benefit of asset allocation through fund managers.  

(3) Revising relevant regulations to accommodate the establishment and management of Funds investing in DA, for example, asset custody, disclosure of information, appropriate advertising and adjustment of suitability test to cover crypto asset investment, etc.  

The notifications concerning the amendments have taken effect on 16 January 2025. The Funds investing in digital assets (DA) under the previous regulations prior to the effective date of the new notifications must comply with the amendments within 90 days from the effective date of the new notifications.

Remarks:

* Digital Assets (DA) refer to (1) investment tokens and (2) crypto assets, i.e., (2.1) cryptocurrency whose value is tied to another currency (stablecoin), ex., Central Bank Digital Currency (CBDC), and cryptocurrency whose value is not tied to another currency (blank coin), ex., Bitcoin, and (2.2) utility token for the purposes related to financial and investment services and speculation similar to financial products, ex., native token and governance token, etc.

** The 13 related notifications are as follows: 

(1) The Notification of the Capital Market Supervisory Board No. Tor Nor. 47/2567 Re: Investment of Funds (No. 29) and Attachment 1, Attachment 2, Attachment 3, Attachment 4-retail MF, Attachment 4-AI, Attachment 4-UI, Attachment 4-PF, and Attachment 5;

(2) Notification of the Capital Market Supervisory Board No. Tor Nor. 50/2567 Re: Establishment of Mutual Funds for Retail Investors and Non-retail Investors and Execution of Agreements for Managing Private Funds (No. 17);  

(3) Notification of the Capital Market Supervisory Board No. Tor Nor. 48/2567 Re: Regulations for Management of Mutual Funds for Retail Investors, Mutual Funds for Non-retail Investors, Mutual Funds for Institutional Investors and Private Funds (No. 7); 

(4) Notification of the Capital Market Supervisory Board No. Tor Thor. 49/2567 Re: Standard Conduct of Business, Management Arrangement, Operating Systems, and Providing Services to Clients of Securities Companies and Derivatives Intermediaries (No. 18); 

(5) Notification of the Office of the Securities and Exchange Commission No. Sor Nor. 48/2567 Re: Rules, Conditions and Procedures for Managing Private Funds that Are Not Provident Funds;  

(6) Notification of the Office of the Securities and Exchange Commission No. Sor Nor. 40/2567 Re: Details of Mutual Fund Schemes (No. 6);

(7) Notification of the Office of the Securities and Exchange Commission No. Sor Nor. 41/2567 Re: Prospectus for Offering of Mutual Funds for Retail Investors, Mutual Funds for Non-retail Investors and Mutual Funds for Institutional Investors (No. 6) and Attachment 1 and Attachment 3, including Form 123-1 and additional clarifications;

(8) Notification of the Office of the Securities and Exchange Commission No. Sor Nor. 42/2567 Re: Prospectus for Offering of Mutual Funds for Institutional Investors or Ultra-High Net Worth Investors (No. 8), including Form 123-1 (UI); 

(9) Notification of the Office of the Securities and Exchange Commission No. Sor Thor. 43/2567 Re: Rules in Detail Related to Advertising and Sales Promotion for Securities Companies and Derivatives Business Operators (No. 11); 

(10) Notification of the Office of the Securities and Exchange Commission No. Sor Nor. 44/2567 Re: Rules, Conditions and Procedures for Handling Client Assets Held in Custody by Custodians (No. 7); 

(11) Notification of the Office of the Securities and Exchange Commission No. Sor Nor. 45/2567 Re: Consideration for Using Credit Rating Information (No. 2) 

(12) Notification of the Office of the Securities and Exchange Commission No. Sor Nor. 46/2567 Re: Exemption for Holding Crypto-Assets by Mutual Funds or Private Funds with an Investment Policy in Crypto-Assets or Investment Tokens; 

(13) Notification of the Office of the Securities and Exchange Commission No. Sor Thor. 47/2567 Re: Registration of the List of Qualified Persons Acting As Fund Supervisors of Mutual Funds (No. 2).  

*** Ultra-High Net Worth (UHNW) Investor Funds refer to (1) mutual funds for institutional investors or ultra-high net worth investors, and (2) private funds for non-retail investors which manage investment in DA for institutional investors and UHNW.

**** Retail Funds refer to (1) mutual funds for retail investors (retail-MF), (2) mutual funds for accredited investors (AI Fund), and (3) private funds for retail investors (PF for retail), which manage investment in DA for investors such as HNW and retail investors.  

Source : SEC amends the regulations for digital asset investment of mutual funds and private funds