Taiwan’s Financial Supervisory Commission (FSC) has introduced a new policy allowing professional investors to invest in foreign cryptocurrency exchange-traded funds (ETFs) through local brokers.
The policy restricts access to these financial products to professional investors, including institutions, high-net-worth entities, and individuals classified as professionals.
Suitability Assessments and Training Requirements
According to a September 30 press release, the new rules require securities firms to implement suitability assessments for clients wishing to invest in foreign crypto ETFs due to the “complex nature of virtual assets and their significant price volatility.”
These assessments, which require board approval, are designed to evaluate whether the client has the necessary expertise and experience with virtual assets and related products before any initial investment is made.
Additionally, non-professional institutional clients are required to sign a risk warning letter before their first investment, and brokers must provide them with detailed product information before any purchase is completed.
The FSC also mandates that securities firms offer regular education and training to their staff on virtual assets and related products. This training aims to ensure that business personnel fully understand these products and can effectively guide clients through the investment process.
The regulator will also continue to monitor the implementation of these measures to protect investor interests while increasing the competitiveness of Taiwan’s securities firms.
This new framework follows consultations with the Securities Business Association of the Republic of China, which assessed the relatively high risks of virtual asset ETFs from other countries. By recommending that only professional investors be allowed to participate through re-entrustment, the FSC aims to both provide a broader range of investment products and ensure these high-risk opportunities are limited to those with the necessary expertise.
Taiwan’s Crypto Regulation Plans
Earlier this year, Taiwan announced plans to introduce a regulatory framework for cryptocurrencies, driven by rising concerns over fraudulent activities in the sector.
According to local reports, FSC Chairman Huang Tianzhu stressed the importance of imposing strict penalties on crypto exchanges and foreign currency merchants, highlighting that those assets have no direct connection to the real economy. He also cautioned against the growing risks of investment disputes and unregulated overseas investments.
Tianzhu also emphasized the need to integrate virtual currencies with the traditional financial system and called for additional legislation to ensure the stability of financial markets. Gao Jingping, Deputy Director of the Securities and Futures Bureau, also hinted at the possibility of Taiwanese investors accessing foreign Bitcoin ETFs under the proposed rules.