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Taiwan's financial watchdog greenlights foreign crypto ETFs for pro investors

Vivian Nguyen

Sep. 30, 2024

FSC mandates risk warning and training for virtual asset ETF investments.

Taiwan's financial watchdog greenlights foreign crypto asset ETFs for pro investors

Photo by Roméo A. on Unsplash

Key Takeaways

Taiwan FSC now permits professional investors to invest in foreign virtual asset ETFs.
Securities firms must evaluate investor suitability and provide regular training.

Taiwan’s financial regulator, the Financial Supervisory Commission (FSC), now allows professional investors to invest in foreign virtual asset ETFs through a re-entrustment method, according to a Monday press release from the FSC.

Re-entrust investments refer to the process where investors delegate their investment decisions or management to another party, here a sub-brokerage or a fund manager that specializes in virtual assets.

The latest move is part of the FSC’s effort to diversify product offerings and boost the re-entrustment business of the nation’s securities firms, the agency noted.

Due to the high investment risks associated with these crypto-related ETFs, the FSC decided to limit the offering to professional investors like institutional investors, high-net-worth legal entities, and experienced high-asset clients.

In addition, securities firms are required to establish a virtual asset ETF product suitability system, approved by their board of directors, to evaluate a client’s understanding and experience before allowing them to invest in the ETFs.

These firms must also provide regular education and training for business personnel on virtual assets to ensure comprehensive product understanding, while clients, excluding professional institutional investors, must sign a risk disclosure statement before making their first investment, the FSC added.

Balanced approach

The FSC is taking a balanced approach to regulating crypto assets, combining strict regulations with potential growth opportunities. The new policy comes after the agency announced in March that it planned to propose a new draft of digital asset regulations.

At the time, Gao Jingping, the deputy director of the Warranty Bureau, noted that the Chamber of Commerce was conducting a study on spot Bitcoin ETFs, which suggested the potential acceptance of these investment products in Taiwan.

Huang Tien-mu, chairman of the FSC, said that Taiwan was mulling over accepting domestic spot Bitcoin ETFs but advised caution against investing in foreign crypto-based products due to regulatory uncertainties.

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