Following the U.S. Securities and Exchange Commission’s approval of spot Bitcoin ETFs, Thailand’s Securities and Exchange Commission (SEC) is reassessing regulations on the investments of mutual funds and private funds (collectively “Funds”). The SEC has launched a public consultation on new draft notifications introducing  the new asset classes that can be held by Funds, and aims to bring these rules into effect on January 1, 2025. The highlights of these changes are set out below. Eligible New Asset Classes The new asset classes that can be held by Funds can be categorized into two types—investment tokens and crypto assets—and the determination will focus on substance over form. Investment tokens: If the substance involves raising funds, regardless of what the assets are called, and they are legally issued and offered or approved by home regulators that are members of the International Organization of Securities Commissions (IOSCO), Funds can invest in these types of assets as transferable securities within the permitted ratio. Crypto assets: The eligible crypto assets which Funds are entitled to hold focus on crypto ETFs or offshore funds investing in crypto assets, and they are subject to investment limits. Funds can hold crypto assets directly, but only temporarily, and only for the purpose of purchasing, selling, or exchanging the crypto assets, not speculative purposes. The notifications state that Funds may hold Bitcoin/Ethereum for no longer than five business days and USDT/USDC for no more than one month. Investment Limits Typically, the rules segregate investment limits into listed and non-listed digital assets, and the limits depend on the sophistication of the investors in the Funds. In general, UI Funds (mutual funds offered to institutional investors or ultra-high net worth investors) can invest in these new asset classes without any limitations, although net exposure to other crypto assets  –  which

In recent years, Thailand has witnessed significant developments in its personal finance sector, particularly in alternative lending options. This article explores two key concepts in the Thai financial landscape: nano finance and personal loans. These alternative lending models, regulated by the Bank of Thailand (BOT), aim to provide more accessible financial services to individuals and small entrepreneurs who might have limited access to traditional funding sources. Nano Finance: Empowering Small Entrepreneurs The nano finance scheme under the BOT’s supervision is designed to provide funding to small entrepreneurs who might have limited access to traditional financial resources. One of the key features of this scheme is the ability of licensed nano finance providers to use alternative data in assessing loan applicants’ ability to repay (information-based lending). To implement this approach, nano finance providers must have an internal policy on credit approval that supports: Identifying scope and processes for utilizing alternative factors or technologies in determining debt repayment capacity, credit line limits for each loan applicant and total credit limits, and acceptable debt repayment targets; Having resources and personnel with sufficient knowledge, capability, experience, and expertise to operate efficiently and effectively, as well as clear checks and balances; Establishing guidelines for selecting and analyzing factors or financial models to evaluate or predict loan applicants’ ability and willingness to repay; Having an internal sandbox to test key success factors of the selected factors or models; and Having a process for monitoring and reviewing the application of the selected factors or models in assessing debt repayment capability. This approach allows nano finance providers to make more informed lending decisions based on a broader range of data, potentially increasing access to finance for small entrepreneurs who may not have traditional credit histories or collateral. Personal Loans The personal loan scheme under BOT supervision aims

On September 12, 2024, the Bank of Thailand (BOT) Notification Re: Virtual Bank Supervision Criteria took effect. According to this notification, virtual banks must adhere to standards for traditional commercial banks, along with additional requirements tailored to address virtual banks’ digital nature and corporate structure. Specific Requirements The concepts of supervision remain unchanged from the consultation paper titled “Criteria for Supervising Virtual Banks”. Some of the key additional provisions and details on supervision criteria relate to the following: Financial business groups: The notification identifies virtual banks as financial businesses, subject to the BOT’s regulations on financial business group supervision. If a virtual bank is a part of another financial institution’s financial business group, the virtual bank must be under a solo consolidated group. After the “initial phase” (see below), other financial institutions and companies within the financial business group are prohibited from extending credit to or engaging in transactions similar to lending activities with the virtual bank. Capital fund requirements: If other financial institutions’ investment in a virtual bank increases the capital fund in the financial system beyond a safe level and this poses a risk to other financial institutions, the BOT may order the relevant financial institution to maintain capital funds as the BOT deems appropriate. Service channels and outsourcing: Virtual banks must provide services solely through digital channels, except when necessary. For example, with the BOT’s approval, a virtual bank may use other commercial bank electronic branches via an ATM pool system, use a banking agent to serve customer needs for cash, or occasionally provide on-site services. Initial Phase The “initial phase” runs from the date that the virtual bank commences its operations until it receives the BOT’s approval to become fully operational. During this period, certain BOT supervisory requirements are relaxed as follows: Governance: Virtual banks in the initial phase may request

On July 23, 2024, the State Bank of Vietnam (SBV) published a draft circular regulating the implementation of open (publicly available) application programming interfaces, or Open APIs, in the banking industry (Draft Circular) to collect public comments. Open APIs in the banking sector are APIs of banks that allow third parties to process data for their own use or to provide products and services to customers. Urgent need Currently, the development of Open APIs in Vietnam is fragmented, with each bank using different API standards and security standards. There is no common standard for information technology systems, information storage, security, connectivity, or legal frameworks. Therefore, the promulgation of a regulation on Open APIs is urgently needed to create a clear legal basis and guidance for electronic banking transactions, especially in connecting to bank information systems and processing customer data safely, and creating new, innovative products and services to meet the increasing needs of customers. Cooperation of banks required The Draft Circular requires banks to provide Open API services to third parties for connection to the bank system and data processing. Banks have the right to refuse or suspend Open API services if third parties do not meet specified conditions. However, banks will be responsible for ensuring the quality and security of data, providing tools for customer data queries and revocation of third-party data processing rights, and coordinating with third parties and authorities to resolve issues. The Draft Circular standardizes Open API functions for all banks according to the Open API function list and the technical standards list specified in the Draft Circular. Open API service contract The template Open API service contract between banks and third parties using Open API services must have certain required contents such as provisions regarding confidentiality, data use purpose, and that the security level