Taiwan Opens Doors for Investors in Foreign Virtual Asset ETFs

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Taiwan Opens Doors for Investors in Foreign Virtual Asset ETFs

Taiwan’s financial authorities have officially opened the door for select investors to engage with exchange-traded funds (ETFs) that track foreign virtual assets through a strategy known as re-entrustment. This innovative approach enables investors to delegate their investment decisions to licensed financial institutions.

In an announcement made on Monday, September 30, the Financial Supervisory Commission (FSC) of Taiwan disclosed that it collaborated with the Securities Business Association of the Republic of China to conduct a comprehensive review of the substantial investment risks associated with the asset class before permitting the trading of the financial products.

Taiwan: Access to Crypto ETFs Restricted to Professional Investors

The FSC specified that only professional investors, such as high-net-worth individuals, high-asset clients, investment funds, and qualified natural persons—are permitted to access these offerings.

“Considering the complex nature of virtual assets and violent price fluctuations, and the high risk of investment in virtual asset ETFs, the principals entrusted by securities firms to buy and sell foreign virtual asset ETFs must be professional investors,” said the regulator.

This group of investors can now explore opportunities within the rapidly evolving crypto ETF market, which currently includes various options such as Bitcoin BTC $63 631 24h volatility: -3.1% Market cap: $1.26 T Vol. 24h: $27.08 B , Ethereum ETH $2 619 24h volatility: -1.3% Market cap: $315.37 B Vol. 24h: $13.81 B , and Solana SOL $155.0 24h volatility: -1.1% Market cap: $72.74 B Vol. 24h: $2.83 B , issued by prominent asset managers including BlackRock, Grayscale Investments, and Fidelity.

These funds are available in several markets outside the United States, including Hong Kong, which approved the investment products for trading in April 2024. Since then, countries such as Australia and Brazil have followed suit, allowing these assets to be listed on their major stock exchanges.

The FSC’s initiative is expected to provide Taiwanese investors with enhanced access to global markets, enabling them to diversify their investment portfolios.

Regulatory Requirements for Offering Virtual Asset ETFs

For companies intending to offer these products to Taiwanese investors, the financial regulator mandates the establishment of an appropriate virtual asset ETF product suitability system, which must be submitted to the board of directors for approval prior to engaging in these services.

Once approved by the authorities, financial institutions must also assess their customers’ understanding of the investment products before allowing any purchases.

Additionally, these companies are required to conduct regular education and training programs on virtual assets and related products for their personnel to ensure they possess a comprehensive understanding of the offerings.

The FSC said it also plans to continuously monitor the implementation of these measures, aiming to safeguard investor interests while enhancing the “competitiveness of securities firms.”

FSC to Introduce New Regulatory Measures

Despite granting approval for the trading of Bitcoin and Ethereum ETFs in Taiwan, Huang Tianzhu, Chairman of the Financial Supervisory Commission (FSC), has issued warnings to investors about the lack of correlation between cryptocurrencies and the real economy. He clarified that while these ETFs do not directly contain the underlying assets, they are designed to track their prices.

Earlier this year, he also expressed concern over the rising incidence of fraudulent activities in the country’s digital asset sector. To address these issues, he indicated that the FSC is preparing to implement stringent regulations aimed at mitigating such crimes.

Furthermore, Huang specified that all crypto exchanges and service providers in Taiwan will be required to comply with these new rules. He warned that failure to adhere to the upcoming legislation would lead to severe administrative penalties for the companies.next

Taiwan Opens Doors for Investors in Foreign Virtual Asset ETFs