New Regulations for Virtual Asset ETFs in Taiwan
- Access to virtual asset ETFs limited to professional institutional investors.
- Establishment of a ‘virtual asset ETF suitability system’ mandatory for security firms.
In a recent announcement, Taiwan’s Financial Supervisory Commission (FSC) has implemented new regulations allowing professional investors to engage with foreign virtual asset exchange-traded funds (ETFs) through a re-entrustment service. This initiative aims to expand product diversity and bolster the re-entrustment of business by securities firms in Taiwan.
Who Can Invest?
The FSC has limited participation in these high-risk ETFs to qualified investors, including:
- Professional institutional investors
- Wealthy individual investors
- Clients with high asset levels
Criteria for Investment
Security firms are now required to set up a “virtual asset ETF suitability system” that must receive board approval. This system will evaluate a potential investor’s understanding of virtual assets prior to their initial investment in an ETF.
Additionally, firms must provide comprehensive product information concerning the ETF prior to the first purchase. Regular training and educational resources on virtual assets will also be offered to clients.
Regulatory Oversight and Future Directions
The FSC has pledged to closely monitor the operations of securities firms engaged in re-entrustment and to continually refine relevant regulations. This ensures the protection of investors’ rights while enhancing the competitiveness of local securities firms.
Taiwan’s Evolving Stance on Cryptocurrency
Historically, Taiwan has approached the cryptocurrency sector with caution. However, recent developments indicate a shift towards greater acceptance and regulation. Last September, the FSC issued new guidelines for crypto exchanges aimed at strengthening compliance within the industry.
Subsequently, the government introduced the Virtual Asset Management Bill in October, focusing on:
- Customer protection
- Regulatory obligations
- Industry self-regulation
This bill aims to provide a structured regulatory framework for virtual asset service providers (VASPs) and spur growth within the industry.
