Taiwan May Lift Ban on Multi-Delegated Bitcoin ETF Purchases? FSC: Decision Expected as Early as Next Month

Taiwan’s Financial Supervisory Commission (FSC) Chairman, Huang Tien-mu, warned investors today to assess their risk tolerance amid the surge in the cryptocurrency market. Huang emphasized that investing in virtual assets carries significant risks and speculative nature, as they lack intrinsic value and are highly volatile. In September last year, the FSC issued guidelines for virtual asset platform and trading businesses, urging investors to evaluate their risk tolerance as the consequences of a burst bubble could be severe. Regarding the recent surge in Bitcoin, Huang attributed it to two main factors—the US Securities and Exchange Commission’s (SEC) initial ban on Bitcoin spot ETFs, which was later overturned by a court ruling, and Bitcoin’s automatic halving mechanism, which increases demand as supply decreases. Huang stated that there are currently 25 cryptocurrency exchanges in Taiwan that have complied with anti-money laundering regulations, and investors should trade through compliant exchanges within the country rather than overseas or unapproved individual dealers. In response to cryptocurrency-related scams involving individual dealers, Huang expressed the hope that these dealers, both domestic and foreign, would follow the anti-money laundering regulations and be subject to registration requirements similar to domestic platforms. As for the regulation of virtual assets, when asked if existing regulations such as the Banking Act could be applied, Huang cautioned against close connections between virtual assets and traditional finance. He cited the bankruptcies of the US-friendly cryptocurrency banks, Silvergate Bank and Silicon Valley Bank, as examples of the risks associated with such connections. Therefore, the legislation will focus on a dedicated law rather than existing regulations, with the preliminary results of outsourced research on virtual asset legislation expected to be presented in September. Huang emphasized that the current priority is to protect virtual asset investors, and before the dedicated law is completed, major cryptocurrency industry players have been preparing to establish self-regulatory associations to communicate and handle related issues. Regarding the possibility of Taiwanese investors purchasing overseas Bitcoin ETFs through delegated trading, Huang stated that the Taiwan Securities and Futures Bureau has requested the Securities Association of Taiwan to study the matter, with the results expected to be announced in April. It was reported earlier that after the SEC approved the listing of 11 Bitcoin spot ETFs in January, Taiwanese investors were initially able to purchase them through delegated trading. However, several Taiwanese securities firms announced on March 23 that they had received notifications from the supervisory authorities that, considering the high price volatility and risks of virtual currency products, they could no longer offer delegated trading for Bitcoin ETFs. However, legislator Ke Ju-chun questioned the decision, arguing that prohibiting securities firms from offering delegated trading would force investors to purchase through overseas firms, making it more difficult for the government to monitor Taiwanese investors’ investments in Bitcoin ETFs. Securities firms would also lose commission revenue, and investors would have to bear the risks of investment disputes with overseas firms, potentially falling into scams without protection, resulting in a lose-lose situation for the government, securities firms, and investors.