Thai SEC approves first Bitcoin fund
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Thai SEC approves first Bitcoin fund

One Asset Management is the first Thai company endorsed to offer a spot Bitcoin exchange-traded fund. (Photo: Reuters)
One Asset Management is the first Thai company endorsed to offer a spot Bitcoin exchange-traded fund. (Photo: Reuters)

The Securities and Exchange Commission (SEC) has endorsed One Asset Management (ONEAM) becoming the first firm to launch a spot Bitcoin exchange-traded fund (ETF) in Thailand, which is limited to wealthy and institutional investors.

The ONE Bitcoin ETF Fund of Funds Unhedged and not for Retail Investors (ONE-BTCETFOF-UI), is scheduled to be distributed between May 31 and June 6, with an investment risk level of eight.

The fund has a policy to invest in 11 leading global funds to guarantee liquidity and safety, storing coins using international standards, and has been reviewed by international regulatory agencies in the US and Hong Kong.

Meanwhile, MFC Asset Management continues to await SEC approval for a Bitcoin ETF, again restricted to wealthy and institutional investors.

"Digital assets are an alternative asset that have low correlation with other financial assets. They are suitable to help investors diversify investment risks," said Pote Harinasuta, chief executive of ONEAM.

Bitcoin ETFs are gaining international recognition, especially from overseas regulatory agencies after the US SEC approved the creation of funds that invest directly in spot Bitcoin through ETFs earlier this year.

In April, Hong Kong's Securities and Futures Commission allowed the establishment of ETFs that invest in both Bitcoin and Ethereum.

The total market capitalisation of Bitcoin is US$1.4 trillion, compared with $14 trillion in gold market capitalisation.

"Although the supply of Bitcoin is limited at 21 million, demand is rising as it gains popularity. We see high growth potential for Bitcoin," said Mr Pote.

Over the past 11 years, the average return of Bitcoin has been as high as 124% per year, while the average annual volatility is also elevated at 83%.

"Investing in Bitcoin can offer good returns, but comes with high volatility," he said.

ONEAM recommends investors allot only 5% of their portfolio to Bitcoin to obtain a return of 8.90% per year.

The return relative to risk of this portfolio (the Sharpe ratio) is 0.71, with a maximum draw down of -22.4%.

A portfolio without Bitcoin generates a return of 5.80% per year, with a Sharpe ratio of 0.48 and a maximum draw down of -20.4%.

This indicates holding Bitcoin helps improve the expected return and Sharpe ratio, even though overall volatility increases slightly, said Mr Pote.

He said an important feature of Bitcoin ETFs is coin storage security.

"Investing in Bitcoin directly through various platforms contains risks, with past problems including data loss or stolen digital assets via the online system," said Mr Pote.

When investing through ETFs, unitholders' data or coins will be distributed through custodians, which offer the same standard used by institutional investors, meaning storage of coins offline, which is highly secure, he said.

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