The U.S. Securities and Exchange Commission (SEC) recently approved the listing of 11 Bitcoin spot ETFs. Previously, Taiwanese investors could purchase them through a delegated trustee. However, several Taiwanese brokerages issued announcements on the 23rd, stating that they received notifications from regulatory authorities. Considering the high volatility and risk of virtual currency commodities, they can no longer purchase Bitcoin ETFs through delegated trustee arrangements.
Earlier, the Financial Supervisory Commission of Taiwan (FSC) stated that according to existing regulations, Bitcoin is not considered a security and is not a component that ETFs can track. Therefore, fund managers cannot issue Bitcoin ETFs. The FSC also mentioned that single-link and fund-of-fund products cannot link to or invest in Bitcoin ETFs. However, regarding the possibility of investing in Bitcoin ETFs through brokerages using delegated trustee arrangements, the FSC responded at the time that delegated trustee arrangements are different from domestic solicitations and sales, and they are currently studying whether to allow it. Results will be available soon.
However, mainstream Taiwanese brokerages, including Yuanta Securities, Cooperative Bank, and SinoPac Securities, simultaneously announced on the 23rd that they received notifications from regulatory authorities. Considering the high volatility and risk of virtual currency commodities and to protect investors, starting from the 23rd, they can only accept delegated sell orders for foreign securities linked to virtual currencies (such as Bitcoin) spot and futures-related products and cannot accept new delegated buy orders.
According to the announcement by Yuanta Securities, a total of 21 Bitcoin-related spot and futures ETFs in the US and Hong Kong markets are affected. Any future changes will be controlled according to regulatory authorities and the requirements of the Securities and Futures Bureau, without additional notifications. Investors are advised to be aware of related investment risks.
According to Article 37 of the Regulations Governing Investment Trust and Management Companies, the index components tracked by ETFs must be “securities,” such as stocks, bonds, or other approved securities, excluding Bitcoin. Huang Hou-ming, Deputy Director-General of the Securities and Futures Bureau of the FSC, previously stated that whether Taiwan will modify the law to allow Bitcoin ETFs in the future requires further research and collection of data from various countries to evaluate.
The only legal channel remaining for Taiwanese investors to invest in Bitcoin ETFs is through overseas brokerages, such as Firstrade, Interactive Brokers, or Cathay Securities. Compared to delegated trustee arrangements, overseas brokerages generally have lower fees. However, investors should also consider the fees for fund transfers abroad and bank telegraphic transfers.
When investing in related ETFs, attention should also be paid to the following details:
1. Tax issues: According to Taiwanese law, profits from overseas investments need to be reported for taxation.
2. Currency exchange and exchange rate risks: Investing in the U.S. stock market usually requires converting funds into U.S. dollars, which may involve exchange rate risks.
3. Market research: Understanding the dynamics and regulations of the U.S. market is important, including trends in different industries and market regulations. Additionally, understanding and managing investment risks is crucial.
4. U.S. stock trading hours: Normal trading hours are from 9:30 AM to 4:00 PM Eastern Time, which is usually from 9:30 PM to 4:00 AM Taiwan time.
5. How to transfer funds back to Taiwan after selling: After selling, funds are usually deposited into your U.S. securities account. You can then initiate an international remittance from your U.S. securities account to transfer the funds to your bank account in Taiwan.
Further reading:
How can Taiwanese investors purchase “Bitcoin spot ETFs”? A three-step tutorial.
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