According to the announcement made on September 30, 2024, this step was taken to make Taiwan’s financial market more competitive and to offer professional investors a wider range of investment options. However, the FSC stated that it will continue to maintain a cautious approach, considering the risks in digital asset markets.

Non-traditional financial instruments such as digital assets and cryptocurrencies have long been closely monitored by Taiwan’s regulatory bodies. Negativities such as fraud, high volatility and money laundering risk, especially brought by crypto assets, have made Taiwan’s attitude towards this sector conservative.

Therefore, the FSC’s decision to open foreign ETFs related to crypto assets to professional investors is seen as a significant shift in the country’s financial markets. This step is in line with Taiwan’s policies supporting innovative initiatives such as the FinTech Regulatory Sandbox.

According to the FSC’s announcement, only professional investors will be able to access foreign digital asset ETFs. These investment instruments are classified as high risk and therefore investing companies must comply with FSC rules for professional investors.

Professional investor status is generally granted to investors who have certain knowledge and experience and manage large portfolios. Thus, Taiwan aims to limit exposure to digital assets, while also offering new opportunities to investors.

The FSC emphasized that it will continue to monitor digital asset markets closely and attach great importance to risk management and regulatory compliance. This is a precaution taken to prevent potential hazards that may arise in the market.

The FSC implements stringent Anti-Money Laundering (AML) measures, specifically targeting cryptocurrency exchanges. In this context, the activities of the stock exchanges are strictly supervised and necessary measures are taken to protect investors.

In implementing this regulation for digital asset ETFs, Taiwan follows similar policies of other Asian financial centers, Hong Kong and Singapore.

Hong Kong and Singapore are also aiming for regional leadership in this field by implementing regulations for digital asset investments. To compete with these centers, Taiwan aims to strengthen its financial market by making digital asset ETFs accessible to professional investors.

However, the Central Bank of Taiwan (ROC) continues to maintain a cautious stance on digital currency (CBDC). Central Bank governor Yang Chin-long stated that they would not rush to issue CBDC, but instead preferred a gradual progress.

Although the Central Bank of Taiwan has developed a CBDC protocol for retail payments, it is taking a more cautious approach rather than competing with other countries around the world that have made major strides in this regard.

While Taiwan’s regulations for digital asset ETFs create new opportunities for professional investors, they also include measures taken against the risks posed by digital assets.

This step by Taiwan is considered an important step towards increasing competitiveness in the country’s financial market and supporting innovative investment instruments.