Taiwan Allows Professional Investors to Access Digital Asset ETFs

• The FSC has limited access to virtual asset ETFs solely for professional institutional investors
• Securities firms must create a “virtual asset ETF suitability system”

Taiwan’s financial regulatory authority is permitting professional investors to engage in “foreign virtual asset” exchange-traded funds (ETFs) via a re-entrustment service.

In an announcement, the Financial Supervisory Commission (FSC) noted that this initiative would offer investors a “variety of product choices and stimulate the activity of China’s securities firms’ re-entrustment operations.”

Due to the substantial risks associated with crypto-related ETFs, the FSC has limited this opportunity to professional investors, which encompasses professional institutional investors, high-net-worth professionals, and clients with significant assets.

Furthermore, the FSC indicated that securities firms are required to implement a “virtual asset ETF suitability system,” which must gain board approval, to assess a client’s professional knowledge of virtual assets prior to ETF investments.

These firms must also provide comprehensive product information regarding the ETF before a client’s initial purchase and offer ongoing training and education on virtual assets.

The FSC stated its commitment to “continuously monitor the management of re-entrusted business by securities firms and enhance relevant regulations to protect the rights and interests of investors while bolstering the competitiveness of securities firms.”

Measured Strategy

Traditionally, Taiwan has maintained a cautious perspective on the cryptocurrency sector.

However, over the last year, there has been a noticeable shift from the financial regulator towards the industry. Last September, the FSC issued guidelines for crypto exchanges aimed at reinforcing crypto regulation.

The following October, the Taiwan government rolled out the Virtual Asset Management Bill.

This bill focuses on customer protection, regulatory responsibilities, and self-regulation within the industry, providing a framework for virtual asset service providers (VASPs) while fostering industry growth.