Taiwan is changing its policy to allow investors to legally access ETFs based on cryptocurrencies such as Bitcoin.
Taiwan’s Financial Supervisory Commission (FSC) has announced that it is adopting the recommendation of the Securities Association of the Republic of China to move toward cryptocurrency investment.
Specifically, the FSC authorized professional investors to access overseas exchange-traded funds (ETFs) based on cryptocurrencies and digital assets. This announcement, made on September 30, marks a significant milestone in the regulation of cryptocurrency investments in Taiwan, aligning with the growing global trend towards the adoption of financial products related to crypto assets and blockchain technology.
Taiwan adapts its regulatory framework to include cryptocurrency ETFs
The policy adopted by the FSC introduces a re-entrustment model that allows Taiwanese investors to access foreign digital asset exchange-traded funds through local financial institutions.
According to release As shared by the authority through its official website, these institutions will act as intermediaries, ensuring compliance with both national and international regulations. By adopting this approach, Taiwan seeks to give a new direction to investment and provide investors with greater selectivity in their options, while recognizing the potential of digital assets.
However, the FSC has set specific criteria to determine who can access these investments, limiting access to cryptocurrency ETFs to professional investors, which include financial institutions, high-net-worth legal entities, and high-net-worth clients, among others. According to the authority, this segmentation will help protect retail and less experienced investors from the risks associated with cryptoassets, which are known for their volatility and price fluctuations in the market.
FSC implements financial health and protection measures
Aware of the risks involved in cryptocurrency investment, the FSC has implemented several safeguards. Firstly, securities firms will be required to establish a suitability system to assess clients’ experience and knowledge before allowing them to invest in digital asset ETFs. This system, which must be approved by each firm’s board of directors, will ensure that only those with the appropriate level of understanding and experience in high-risk investments are allowed to participate in the crypto market.
Additionally, clients will be required to sign a risk warning before making their first investment in these financial products. This warning, according to the agency, will serve as a reminder of the risks associated with investing in cryptocurrencies, which may include significant losses due to the typical volatility of these assets in the market.
Taiwan maintains focus on investor protection
On the other hand, securities firms will also be required to provide relevant information about digital asset ETFs before clients make their first purchase. All of this, in order to educate investors about the potential risks and benefits of their investments, and encourage more informed and conscious decision-making.
The FSC has stressed the importance of continuing education in the cryptocurrency market, so that business advisors are well informed about digital asset-related products and can properly advise clients on the opportunities and risks.
The financial authority also said it will continue to closely monitor the re-listing operations of securities firms with the aim of protecting the rights and interests of investors, while encouraging competition among firms in the sector and promoting Taiwan's leadership in the digital financial ecosystem.
Taiwan’s decision to allow access to cryptocurrency ETFs for professional investors reflects a shift in the perception of crypto assets in the region. With this, the country is joining a growing list of nations that recognize the potential of cryptocurrencies as a legitimate and trustworthy asset class.
