Key Takeaways
- Taiwan looks to allow institutional investors to invest in foreign crypto ETFs.
- Taiwanese crypto firms can invest in ETFs via a re-entrustment process.
- FSC issued guidelines for companies and investors to invest in crypto ETFs.
Taiwan’s Financial Supervisory Commission (FSC) has announced a significant policy shift, allowing institutional investors to invest in foreign crypto exchange-traded funds (ETFs) through a re-entrustment process.
On Monday, Sept. 30, the Financial watchdog issued guidelines for companies and investors, paving the way for professional investors to tap into the crypto market.
FSC Guidelines
Taiwan’s government has been actively monitoring developments around ETF products since their launch in the United States earlier this year.
After months of review and consultations with the Securities Business Association over ETF investment risks and crypto volatility, the FSC has deemed crypto ETF investments fit for institutional clients.
The FSC has specified that only professional investors, including institutional investors, high-net-worth individuals, high-asset clients, and institutional funds, can be entrusted with investing in crypto ETFs on behalf of Taiwanese institutional investors.
To invest in foreign ETFs, securities firms must establish a “suitability system” approved by their board of directors. As part of this process, they must also evaluate the entrusted entity’s virtual asset investment experience and knowledge before making investment decisions.
Additionally, institutional firms looking to invest via re-entrustment must sign a risk warning before the securities firm can accept their entrustment, and the entrusted entity must provide complete product information about virtual asset ETFs before the client makes the first purchase.
The FSC said it will continue to monitor securities firms entrusted with ETF investment business, ensuring that they comply with regulations and maintain fair market practices. The authority has also pledged to refine its regulatory framework to protect investors’ rights and promote healthy competition in the market.
Crypto ETFs Demand Surging in Asia
Taiwan’s move comes as demand for crypto ETFs surges in Asia, where regions such as Hong Kong and Singapore are actively embracing crypto adoption. However, the continent also presents a contrasting picture, with China and India imposing strict regulations on the asset class.
China has imposed a blanket ban on crypto use since August 2021, while India imposed a banking ban followed by a 30% tax on crypto profits.
In stark contrast, Hong Kong has approved six Bitcoin ETFs since April, while Taiwan has been monitoring developments around ETF products.
The success of Taiwan’s re-entrustment ETF investment method for institutional investors could pave the way for retail investors to access these products in the future.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
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