- The Taiwan FSC has restricted the access of virtual asset ETFs exclusively to only professional investors.
- Before permitting investments, securities firms must assess their clients’ expertise.
- The firms must adhere to mandatory ongoing education and strict risk disclosure protocols.
The Taiwan Financial Supervisory Commission (FSC) recently implemented new regulations for professional investors. These crypto regulation rules allow them to invest in foreign crypto ETFs and other virtual assets through re-entrustment.
The primary goal of this decision is to diversify investment opportunities. Additionally, Taiwan FSC aims to enhance the re-entrustment operations of Taiwan’s securities firms.
There are high risks associated with crypto ETFs. Due to this, the Taiwan FSC has allowed this investment product to professional investors only.
FSC’s Balanced Approach to Crypto Regulation
The FSC is implementing a balanced approach to virtual asset regulation. It has focused on two key aspects: strict rules and growth opportunities. This new press release follows the agency’s March announcement about drafting new digital asset regulations.
Gao Jingping, Deputy Director of the S&F Bureau, indicated that the Securities Dealers Association was examining spot Bitcoin ETFs. This statement suggested a potential future acceptance of these investment products in Taiwan, which would come with regulations included.
Similarly, the Taiwan FSC Chairman Huang Tian-mu mentioned that Taiwan is considering accepting domestic spot Bitcoin ETFs. However, he advised caution regarding investments in foreign crypto-based products due to regulatory uncertainties.
He also noted that the Taiwan FSC would issue a circular detailing the new regulations by September 2024. This they did on September 30th.
Professional investors are now limited from investing in foreign crypto ETFs
In its September 30th press release, the Taiwan FSC announced stricter regulations for investing in virtual asset ETFs. The organization classified them as highly risky and volatile.
These rules apply to institutional investors, high-net-worth individuals, legal entities, and other high-asset professional investors.
Clients must prove their professional status to ensure only knowledgeable and experienced investors participate. So they could be allowed to invest in crypto ETFs.
Securities firms must also assess investors’ awareness of virtual assets and their previous experience. This meant that the professional must be fully aware. They should possess knowledge of virtual assets and related product investment before they jump into them financially.
These measures aim to protect investors while promoting responsible investment practices. The Taiwan FSC emphasized that these investments are unavailable to individual retail investors.
By doing so, it will focus on those capable of handling the complexities of the virtual asset market. This move is designed to shield inexperienced investors from the high risks of virtual asset ETFs.
Foreign Virtual Asset ETFs: New Strict Regulations for Securities Firms
Securities firms offering foreign virtual asset ETFs must now implement a product suitability system approved by their board of directors.
This system evaluates each client’s knowledge and experience with virtual assets before allowing them to invest in these complex products. By doing so, they are ensuring that they receive appropriate instruments.
Before their first investment, firms must provide non-institutional professional investors with clear and understandable product details.
Firms doing this will help make them fully aware of the risks and characteristics of virtual asset ETFs. Clients must also complete a risk warning letter to acknowledge their understanding.
Additionally, the Taiwan FSC mandates ongoing education and training for securities firm personnel on virtual assets and related products. This ensures that staff are well-informed and capable of advising clients effectively.
The FSC will continue to oversee the management of foreign virtual asset ETF investments by Taiwan’s securities firms. Thus, it aims to maintain regulatory compliance and protect shareholders’ rights.
These are the critical reasons why the Taiwan FSC wants proper process to be followed. Also, the commission is committed to refining these regulations if needed ahead.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.
