Taiwan: Crypto ETFs approved for professional investors

The Financial Supervisory Commission (FSC) of Taiwan has officially announced today that it will now allow professional investors to indirectly invest in ETFs based on "virtual assets".

Specifically, this is the "re-entrustment process" in which Taiwanese large-scale investors are now able to buy crypto ETFs from abroad by delegating their investment decision to third parties.

Part of the process is that financial service providers are required to assess the experience and knowledge of the entities for which they are to invest in the ETFs before giving them access to the asset class.

Taiwan is known for its rather restrictive approach to Bitcoin and the like. This is due in particular to the supposed risks associated with investing in cryptocurrencies, according to the authority. For this reason, the purchase of foreign Bitcoin spot ETFs is also not permitted to retail investors, as the FSC clarifies in the press release.

Considering the complexity of virtual assets and high price volatility, the investment risk of virtual asset ETFs is relatively high, and the clients entrusted by securities dealers to trade in foreign virtual asset ETFs are limited to professional investors.
_{from the press release}

The "professional investors" include high-net-worth individuals, institutional investors and funds. With this relaxation, the FSC aims to expand product diversity on the Taiwanese capital market.

Although Bitcoin spot ETFs were already tradable in Canada before the USA, the approval of the investment products by the US Securities and Exchange Commission (SEC) has set the ball rolling. The fact that the world's largest economy has legitimized the new asset class to a certain extent seems to have prompted other nations to reconsider their stance on Bitcoin and the like - especially Asian countries.

A few months later, Bitcoin spot ETFs were approved in Hong Kong and Thailand. In South Korea, Bitcoin ETFs even emerged as a relevant election issue. Even in China, which is rather hostile to Bitcoin, the former finance minister recently spoke out and emphasized that the topic should be explored after the start of trading in exchange-traded Bitcoin funds in the USA - Blocktrainer.de reported.

For the adoption of the still young asset class, it is definitely advantageous if investors around the world have additional opportunities to invest in Bitcoin via a regulated framework. The signal effect of the ETF approval should not be underestimated, as many investors are likely to see it as legitimizing the asset - even if regulators generally still emphasize the risks of digital assets in this context.