Republic of China Allows Investments in Foreign Bitcoin ETFs
Highlights
- Securities firms in Taiwan must secure board approval before facilitating Bitcoin ETF investments.
- Non-institutional investors are required to sign a risk warning before making their first purchase.
- The decision follows increasing global demand for Bitcoin ETFs, particularly in the U.S.
Taiwan’s topmost financial securities regulator – the Financial Supervisory Commission (FSC) – stated that professional investors will be able to invest in cryptocurrency exchange-traded funds (ETFs), including Bitcoin ETF, via a re-entrustment method. Taiwan, or Republic of China, has bolstered relations with the US amid Chinese lawmakers’ cautious crypto shift amid the rising demand for spot Bitcoin ETFs.
Republic of China Open the Gates for Crypto ETFs
In the latest announcement, Taiwan FSC stated that it is allowing professional investors to re-entrust investment in foreign virtual asset ETFs, including Bitcoin ETF. Further, the regulatory body has started consultations with the Securities Business Association of the Republic of China to review the investment risks associated with foreign crypto ETFs.
The decision comes amid the goal of providing investors with diverse product choices and boosting China’s re-entrustment business for securities firms. As a result, the FSC recommends that professional investors invest in these high-risk ETFs via re-entrustment. The development comes two months after Taiwan Mobile secured a license to be the virtual assets service provider (VASP) in the country.
Initially, retail investors in the Republic of China won’t have exposure to crypto ETFs. Only professional investors including institutional investors, high-net-worth legal entities, and individual investors with substantial asset portfolios and relevant investment experience, can gain the exposure.
Similarly, securities firms in the country first need to have the board approval to gain exposure to Bitcoin ETFs. They must assess a client’s knowledge and experience with virtual assets before facilitating their initial investment.
Except for institutional investors, clients will need to sign a risk warning letter before their first purchase of the crypto ETF, noted Taiwan FSC.
Similarly, for any purchases made by non-institutional clients, securities firms need to provide detailed product information about the ETF. Also, regular education on virtual assets and related products will be mandatory, as part of Taiwan’s crypto regulations.
The Republic of China FSC has stated that it will monitor the implementation of these measures and continue to refine regulations to protect investors while enhancing the competitive edge of securities firms.
Rising Demand for Bitcoin ETFs
The spot Bitcoin ETFs continued to be in demand raking in more than $1 billion in inflows last week in the United States. Other markets like Hong Kong and Australia have also launched this investment product providing investors a regulated environment of investing in this asset class.
Despite the ban, Chinese investors are seeking shelter in Bitcoin amid the fragility of the country’s economy. Last week speaking at the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, former Chinese finance minister Lou Jiwei urged to closely examine advancements in the crypto sector. Meanwhile, the Republic of China has seen increase in demand for crypto and Bitcoin ETFs.
Amid the growing demand for US Bitcoin ETFs, Lou warned about the negative implications that crypto can have on global financial stability.
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