Thailand SEC Approves Country’s First Bitcoin ETF, Which Is Targeting Wealthy and Institutional Investors

by

As an experienced financial analyst, I believe this is a significant development for the Thai financial market and a promising sign of the growing acceptance and recognition of Bitcoin as an alternative asset class. ONEAM’s Bitcoin ETF marks the first of its kind in Thailand, and it underscores the increasing demand for digital assets among wealthy and institutional investors.

In a groundbreaking decision for Thailand’s financial sector, the Securities and Exchange Commission (SEC) has approved One Asset Management (ONEAM) to introduce the nation’s initial Bitcoin exchange-traded fund (ETF). The ONE Bitcoin ETF Fund of Funds Unhedged, which is not intended for retail investors, is slated for distribution between May 31 and June 6. This investment carries a risk level of eight.

Based on a report released today by Bangkok Post, the wealthy and institutional investor-focused fund intends to put money into 11 top global funds for liquidity and security reasons. ONEAM highlights the significance of adhering to international storage standards for cryptocurrencies and has undergone evaluations from regulatory bodies in the US and Hong Kong.

Pote Harinasuta, CEO of ONEAM, is convinced that investments in digital assets like Bitcoin provide a new type of asset with minimal connection to traditional financial markets. This belief enhances portfolio diversification by lessening overall investment risks. The green light for ONEAM’s Bitcoin ETF arrives at a time when these funds gain increasing international acceptance, following the US Securities and Exchange Commission’s decision in early 2021 to allow ETFs investing directly in spot Bitcoin. Moreover, Hong Kong’s Securities and Futures Commission granted approval for ETFs backing both Bitcoin and Ethereum in April.

With a total cap of only 21 million units, the in-demand Bitcoin cryptocurrency is experiencing a surge in popularity and interest. Harinasuta anticipates significant growth for this digital currency, pointing to its impressive average annual return of 124% over the last eleven years. Nevertheless, he cautions that Bitcoin’s value can fluctuate dramatically, with an average annual volatility rate of 83%.

To achieve a satisfactory blend of profits and risk, ONEAM advises investors to put 5% of their investment assets into Bitcoin. This portion is projected to bring an annual return of 8.90%, accompanied by a Sharpe ratio of 0.71 and a maximum loss of 22.4%. In contrast, a portfolio without Bitcoin would result in a return of 5.80% per year, boasting a Sharpe ratio of 0.48 and a maximum loss of 20.4%. The data implies that including Bitcoin in the portfolio can enhance anticipated returns and risk-adjusted performance, even though it brings about a slight uptick in overall risk.

One notable advantage of Bitcoin ETFs is the enhanced security for coin storage. Harinasuta highlights the potential risks associated with investing in Bitcoin directly via different platforms, such as data loss or digital asset theft through online systems. In contrast, ETF investors’ data and Bitcoins are kept safe by custodians, adhering to institutional-level safeguards. This includes offline storage of coins, a security measure deemed highly effective.

It’s intriguing that Monochrome Asset Management’s Bitcoin ETF, IBTC, began trading today on the Cboe Australia exchange. Prior to this development, reported by CoinDesk yesterday, Australian investors could only access Bitcoin through indirect investment in ETFs or offshore products. However, these alternatives did not offer the same level of investor protection as directly holding the crypto asset under the Australian Financial Services Licensing (AFSL) framework.

Read More

2024-06-04 16:29