Thailand SEC Approves The First Spot Bitcoin ETF, A Rising Global Trend
Thailand SEC has taken a significant step to approve a spot Bitcoin exchange-traded fund (ETF). Thailand’s cryptocurrency market become the first Southeast Asian country to approve a spot Bitcoin exchange-traded fund (ETF).
The Securities and Exchange Commission (SEC) of Thailand has approved One Asset Management (ONEAM) to launch the ONE Bitcoin ETF Fund of Funds Unhedged and not for Retail Investors (ONE-BTCETFOF-UI).
However, the ONE-BTCETFOF-UI is designed for a specific investor demographic – wealthy individuals and institutions. The fund, scheduled to be available between May 31 and June 6, carries an investment risk level of eight, signifying a high-risk investment.
Bitcoin ETF Approval A Global Trend
This targeted approach aims to mitigate risks by adhering to a strict policy of investing in 11 leading global funds, ensuring liquidity and safety. The fund utilizes international standards for coin storage, further enhancing security by undergoing review from regulatory agencies in the US and Hong Kong.
Pote Harinasuta, ONEAM’s CEO, highlights the potential of digital assets as an alternative asset class. He believes their low correlation to other financial assets makes them ideal for diversifying investment portfolios and managing risk.
The approval of this Bitcoin ETF reflects a growing global trend. The US Securities and Exchange Commission (SEC) and Hong Kong’s Securities and Futures Commission have also paved the way for the creation of funds directly investing in spot Bitcoin and Ethereum. This signifies a broader acceptance of cryptocurrencies within the traditional financial system.
Additionally, ONEAM emphasizes the potential of Bitcoin due to the rising demand coupled with a limited supply of only 21 million coins. The company anticipates substantial growth for Bitcoin, citing its impressive historical performance with an average return of 124% per year over the past 11 years, although it acknowledges the associated high average annual volatility of 83%.
Critical Security Need For Bitcoin
To manage risk, ONEAM recommends a 5% allocation of Bitcoin within an investor’s portfolio, projecting an annual return of 8.90%, a Sharpe ratio of 0.71, and a maximum drawdown of -22.4%.
In comparison, a portfolio without Bitcoin is projected to yield a 5.80% return annually, a Sharpe ratio of 0.48, and a maximum drawdown of -20.4%.
Pote underscores the significance of secure coin storage in Bitcoin ETFs, addressing the risks associated with direct investments on various platforms, such as data loss or theft. ETFs offer a solution by distributing unitholders’ data and coins through custodians, employing the same security standards used by institutional investors. This includes storing coins offline and enhancing protection against unauthorized access.
While ONEAM celebrates its accomplishment, MFC Asset Management is also awaiting SEC approval for its own Bitcoin ETF, similarly targeting wealthy and institutional investors.
