Taiwan Approves Foreign Virtual Asset ETFs for Professional Investors

• The FSC enables professional investors to diversify through foreign virtual asset ETFs.
• Enhanced suitability assessments ensure investors understand virtual asset risks before trading.
• Regular training equips securities firm staff with knowledge on virtual asset products and risks.

Taiwan’s Financial Supervisory Commission (FSC) has given professional investors the go-ahead to re-entrust investments in foreign virtual asset exchange-traded funds (ETFs). This move will diversify investment options and stimulate the re-entrustment business within Taiwan’s securities firms.

The FSC worked with the Securities Business Association of the Republic of China to assess the increased investment risks associated with foreign virtual asset ETFs. Professional investors can now invest in these high-risk assets through re-entrustment, expanding their investment opportunities.

The FSC has outlined specific criteria for professional investors. Individual investors must be categorized as professional investors to invest in foreign virtual asset ETFs. This category includes institutional investors, high-net-worth legal entities, and natural persons recognized as professional investors. This classification aims to reduce the risks associated with the volatile nature of virtual assets and their ETFs.

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Enhancing Risk Management and Training

The FSC has also mandated that securities firms enhance their customer understanding procedures. Firms must establish a robust suitability system for virtual asset ETF products and gain board approval for these systems. They must evaluate clients’ knowledge and experience in virtual assets before any initial purchases to determine whether a product is suitable for a specific investor.

In addition, the FSC is emphasizing risk management. Clients who are not classified as professional institutional investors must sign a risk warning letter before making their first purchase of virtual asset ETFs.

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Securities firms must also provide comprehensive product information regarding virtual asset ETFs before clients proceed with their first purchase, unless the clients are professional institutional investors. This requirement will increase transparency and help investors make informed decisions.

To ensure that employees are well-versed in virtual assets, the FSC is requiring regular education and training programs for securities firm personnel. This initiative will help staff gain a thorough understanding of virtual asset products and the risks involved.