Thailand develops digital securities and baht stablecoin frameworks

Thailand’s financial regulators are developing frameworks for digital securities, baht-backed stablecoins and retail cryptocurrency investment funds, with several key measures still dependent on new rules or legislative approval.

The plans could allow smaller investments in securities and faster settlement of transactions. However, those benefits remain conditional on the legal framework, supporting technology and readiness of market participants.

The Bangkok Post reported the programme’s direction, citing Securities and Exchange Commission (SEC) deputy secretary-general Jomkwan Kongsakul. It encompasses proposed securities legislation, a division of stablecoin oversight with the Bank of Thailand and a framework for cryptocurrency exchange-traded funds (ETFs).

Digital securities and smaller investments

Tokenisation would allow traditional financial assets, including corporate bonds and investment fund units, to be represented as digital tokens. One potential application is fractional ownership, enabling investors to purchase smaller portions of securities that would otherwise require substantial capital.

Depending on product structures and applicable rules, investment units could be divided into amounts as small as 10 or 100 baht. These figures describe a possible use of the technology, rather than an announced minimum investment for an available product.

Digital securities could also be exchanged simultaneously with digital cash using smart contracts. If the necessary infrastructure and legal framework are established, this could enable near-instant settlement and reduce reliance on the conventional T+2 settlement cycle.

Other possible uses include automating eligibility checks and purchase limits, distributing interest payments directly to digital wallets and maintaining more transparent ownership records.

A proposed Electronic Securities Act would support a fully electronic, or 100% scripless, securities system. Removing the option to convert electronically recorded securities into paper certificates is intended to preserve a continuous digital record of ownership and transfers.

The draft is undergoing legislative consideration. Separately, proposed amendments to the Securities and Exchange Act could broaden opportunities for qualified operators to establish secondary trading venues for digital securities, including tokenised bonds.

Baht stablecoin oversight takes shape

According to Ms Jomkwan’s account, the SEC and Bank of Thailand are working together on a framework for Thai baht stablecoins, which are intended to maintain a stable value against the currency and facilitate payments.

Under the proposed division of responsibilities, the central bank would oversee the stablecoin product and its issuer, including backing assets and relevant operating standards. The SEC would supervise trading and other regulated activities undertaken by digital asset businesses.

A baht stablecoin backed by eligible assets at a 1:1 ratio could potentially provide the digital cash component of a securities transaction. Combined with tokenised bonds or fund units, it could allow money and securities to change hands in a single coordinated transaction.

The central bank is conducting consultations and developing requirements. Ms Jomkwan cautioned that the proposed framework should not be taken as confirmation that baht stablecoins are already available for general payments or securities settlement.

What the proposals could mean for investors

The SEC is also preparing a framework under which asset management companies could seek approval to offer cryptocurrency ETFs to retail investors, initially focusing on Bitcoin and Ethereum. Further clarity is expected in the fourth quarter.

Such funds could give investors exposure to cryptocurrency prices through a regulated investment product without requiring them to manage digital wallets directly. Professional fund management and licensed custodians could provide additional operational safeguards, but would not eliminate price volatility or underlying market risks.

Potential investor protections include prominent risk warnings, suitability assessments and basic asset-allocation guidance. For investors considering these developments, the key distinction is between products and rules being prepared and those formally approved: the proposed frameworks do not themselves establish availability, eligibility or final investment terms.