As a seasoned researcher who has navigated through the labyrinth of financial regulations across various continents, I find Taiwan’s decision to approve foreign digital asset ETFs for professional investors a significant stride in embracing the future of finance. Having witnessed the rapid evolution and acceptance of cryptocurrencies in some parts of Asia, it is refreshing to see countries like Taiwan taking calculated steps towards integrating this nascent technology into their financial ecosystem.
On September 30, 2024, I was thrilled to learn that the Taiwan Financial Supervisory Commission (FSC) approved the entry of foreign crypto exchange-traded funds (ETFs) for professional investors like myself. This decision marks a significant milestone in the evolution of the cryptocurrency market in Taiwan.
Foreign Digital Assets ETFs Approved For Professional Investors
As per the recent announcement, Taiwan’s Financial Supervisory Commission now allows institutional investors to put their funds into foreign exchange-traded funds (ETFs) focused on digital assets. This investment can be made via a re-delegation procedure as mentioned in the statement.
Investors who are considered professionals encompass institutional investors, wealthy individuals with significant assets, legal entities that have substantial investments, as well as individual professionals and their associated funds.
For those unfamiliar with the term, re-entrustment refers to a sequence where an entity hands over investment management duties to another party, who subsequently transfers these responsibilities to a third party. This method enables institutions to invest in niche assets such as foreign crypto ETFs via reliable intermediaries, thereby providing oversight and specialized knowledge while granting access to diverse global markets.
In the case of Taiwan, local financial institutions within the country now have the ability to manage investments on behalf of Taiwanese institutions. These foreign asset managers can be brought in to oversee investments in cryptocurrency ETFs specifically. This setup provides a smooth entry into global crypto markets, all while adhering to local regulatory guidelines and risk management protocols.
After careful consideration with the Securities Business Association (SBA), regarding the potential risks linked to investing in crypto Exchange-Traded Funds (ETFs), the decision has been made. The financial regulator has now given approval for institutional investors to interact with international crypto ETFs.
Yet, it’s essential that specific requirements are fulfilled prior to securities companies or investors being able to put money into foreign crypto Exchange-Traded Funds (ETFs).
Initially, it’s necessary to create an “approved-by-the-board system” for compatibility. Additionally, assessing a client’s proficiency with digital currencies is crucial before engaging in or assisting with investments in cryptocurrency Exchange-Traded Funds (ETFs).
Furthermore, individuals planning to invest in crypto ETFs via delegation are required to acknowledge a risk disclaimer prior to their first transaction. It’s essential for the brokerage to share details about the ETF’s virtual assets and related commodities before any purchase is made by the client.
The Financial Services Commission (FSC) highlighted that they will closely monitor securities companies involved in Exchange-Traded Fund (ETF) investments, focusing on maintaining compliance with regulations, upholding investor rights, and enhancing market competition.
Contrasting Attitude Toward Crypto In Asia
In Taiwan, there’s a noticeable increase in curiosity towards digital assets. On the other hand, some regions within Asia are still cautious about adopting this new investment category because they view it as unstable or risky.
To give an example, the Korea Institute of Finance (KIF) has voiced worries that exchange-traded funds (ETFs) operating in the spot market could have negative impacts on the South Korean economy.
In a similar vein, the Japanese financial authority has highlighted the importance of careful examination before approving Exchange-Traded Funds based on cryptocurrencies. It’s worth noting that a recent poll suggests that Japanese institutional investors are growing more open to the concept of digital assets.
Instead, consider this: Contrarily, the Hong Kong financial regulatory body, known as the Hong Kong Securities and Futures Commission (SFC), endorsed the initial spot Bitcoin ETF in April 2024. The current price of BTC stands at $63,984, representing a decrease of 2.7% over the past 24 hours.
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2024-10-01 02:42