Bitrabo Editorial
On September 30, 2024, Taiwan’s Financial Supervisory Commission (FSC) announced the approval for foreign crypto exchange-traded funds (ETFs) targeted at professional investors.
Approval of Foreign Crypto ETFs for Professional Investors
The FSC’s announcement states that institutional investors can now invest in foreign digital asset ETFs through a re-entrustment mechanism. This includes:
Professional investors encompass institutional investors, high net worth individuals, legal entities with substantial investments, and individuals associated with professional investing.
Re-entrustment involves one party handing over investment management responsibilities to another, which in turn may pass this on to a third party. This method allows institutions to invest in niche assets like foreign crypto ETFs through trusted agents, benefiting from their expertise and adherence to regulatory standards while accessing international markets.
In Taiwan, local institutions can now hire domestic financial entities to manage investments in these crypto ETFs, enabling them to engage with foreign asset managers while ensuring compliance with local regulations and risk management practices.
This decision follows consultations with the Securities Business Association (SBA) regarding the risks of crypto ETF investments. The financial regulator has allowed institutional clients to venture into foreign crypto ETFs.
Nevertheless, specific criteria must be satisfied before securities firms or investors can proceed with investing in foreign crypto ETFs.
Firstly, a suitable system must be established and approved by a firm’s board. They also need to assess their clients’ familiarity with virtual assets prior to facilitating investments in crypto ETFs.
Furthermore, clients wishing to invest through re-entrustment are required to acknowledge a risk alert before their initial purchase, and securities dealers must provide thorough information about virtual asset ETFs to clients before transactions.
The FSC noted that it will actively monitor securities firms involved in ETF investments to ensure compliance with regulations, protect investor rights, and enhance market competitiveness.
Different Perspectives on Crypto Across Asia
Taiwan’s move indicates a rising interest in digital assets, while several other Asian regions exhibit caution regarding this volatile asset class.
The Korea Institute of Finance (KIF) recently voiced concerns about the potential negative impact of spot ETFs on South Korea’s economy.
Likewise, Japan’s financial authority has emphasized a need for careful consideration before approving crypto ETFs, though a recent survey suggests that institutional investors in Japan are growing more open to digital assets.
On the other hand, the Hong Kong Securities and Futures Commission (SFC) approved its first spot Bitcoin (BTC) ETF in April 2024. As of now, BTC trades at $63,984, reflecting a 2.7% decrease in the last 24 hours.