Taiwan Approves Foreign Crypto ETFs for Pro Investors

Taiwan’s Financial Supervisory Commission (FSC) has approved foreign crypto exchange-traded funds (ETFs) for professional investors, marking a significant step in the country's approach to digital assets. The decision, announced on September 30, 2024, enables institutional investors to access these foreign crypto ETFs through a regulated process known as re-entrustment.

The FSC clarified that only professional investors—including institutional entities, high-net-worth individuals, and specific investment firms—are eligible to invest in these ETFs. The re-entrustment process involves delegating investment management to a third party, allowing for greater regulatory oversight while providing access to global crypto markets.

For Taiwanese institutions, this means they can delegate to local financial entities, who can then work with foreign asset managers to handle investments in digital asset ETFs. This framework ensures that proper compliance and risk management are in place, addressing concerns around digital asset volatility.

The FSC’s move came after extensive discussions with the Securities Business Association (SBA) to evaluate potential risks. To mitigate these risks, the FSC has implemented several conditions for securities firms and investors before engaging with foreign crypto ETFs. They must establish a “suitability system”, ensure clients understand the complexities of virtual assets, and provide clear risk disclosures.

Before making any purchases, investors must sign a risk warning, and securities firms are required to offer detailed information on virtual asset ETFs. This is aimed at promoting investor protection and market integrity while enhancing the competitiveness of Taiwan’s financial market.

The FSC will maintain close oversight of securities firms involved in this business, ensuring they remain compliant and safeguard investor interests. This move is a sign of Taiwan’s willingness to engage with digital assets, even as other regions in Asia remain cautious.

For example, the Korea Institute of Finance (KIF) has recently voiced concerns about the economic impact of spot ETFs, while Japan’s regulators advocate for a “cautious approach” toward crypto ETF approvals. Yet, attitudes are evolving, with some Japanese institutional investors showing increased interest in digital assets.

In contrast, Hong Kong has taken a more proactive stance, approving its first spot Bitcoin ETF earlier this year, signaling a more crypto-friendly environment compared to its regional neighbors. Taiwan’s latest decision could position it as a key player in the growing digital asset landscape in Asia.