In an announcement dated September 30, 2024, the Taiwan Financial Services Commission (FSC) shed light on foreign exchange-traded funds (ETF) for professional investors.
Foreign Digital Asset ETFs Approved for Professional Investors
According to the announcementTaiwan’s FSC allows institutional investors to invest in foreign digital asset ETFs through a redistribution process. The announcement notes:
Professional investors include professional institutional investors, legal persons with high investment value, clients with high assets, legal persons or funds of professional investors, and natural persons who are professional investors.
For the uninitiated, re-delegation is a process where one organization transfers financial management to another, and then transfers that responsibility to another person. This allows institutions to invest in special assets – including foreign crypto ETFs – through trusted intermediaries, ensuring proper supervision and expertise while accessing global markets.
In the case of Taiwan, Taiwanese institutions can now outsource investment management to local financial institutions. They may assign an external asset manager to manage the investments in these crypto ETFs. This process facilitates seamless access to global crypto markets while ensuring that local regulatory oversight and risk management procedures are followed.
This decision follows a period of consultation with the Securities Business Association (SBA) regarding the risks associated with crypto ETF investments. The financial regulator has given institutional clients permission to interact with foreign crypto ETFs.
However, several conditions must be met before securities firms or investors can invest in foreign crypto ETFs.
First, they must create a “merit plan” approved by their board of directors. In addition, they must measure the client’s level of expertise with the physical asset before making or facilitating an investment in crypto ETFs.
In addition, clients who want to invest in crypto ETFs through brokerage must sign a risk warning before the first purchase. The securities broker must also provide information on the ETF’s related assets before the client makes a purchase.
The FSC emphasized that it will closely monitor the securities firms involved in the ETF investment business, ensure that they comply with their laws, promote the rights of investors, and promote market competition.
A Different Attitude About Crypto In Asia
While Taiwan’s decision shows growing interest in digital assets, other parts of Asia remain hesitant to embrace the emerging asset class due to its perceived volatility.
For example, the Korea Institute of Finance (KIF) recently is raised concerns about the potential negative effects of ETFs exist on the South Korean economy.
Similarly, Japan’s financial regulator has he insisted the need for “careful consideration” about approving crypto ETFs. However, a recent study is interesting found that Japanese institutional investors are increasingly accepting digital assets.
In contrast, Hong Kong’s financial regulator – the Securities and Futures Commission of Hong Kong (SFC) – approved the first Bitcoin (BTC) ETF in April 2024. BTC is trading at $63,984 at press time, down 2.7% in the last 24 hours.
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