In recent times, Taiwan has not only seen a surge in the popularity of ETFs, but investors have also been paying close attention to the rise of cryptocurrencies. However, following a recent decline in the price of Bitcoin, the Financial Supervisory Commission (FSC) has issued a public announcement, urging people to carefully evaluate the risks associated with participating in cryptocurrency asset trading.
(Previous Summary:
Bitcoin keeps plunging! Hits a two-week low of 61,500, over 220,000 people liquidated with losses exceeding $700 million
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(Background Supplement:
Calculating the actual circulating supply of BTC, will Bitcoin ETF “buy out” the market?
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In recent times, not only has Taiwan witnessed a surge in the popularity of ETFs, but many investors have also been attracted by the upward trend of cryptocurrencies this year. From initially adopting a wait-and-see attitude, they are now considering entering this market. In light of this, the FSC has issued a public announcement today (20th), urging people to carefully evaluate the risks associated with participating in cryptocurrency asset trading.
No intrinsic value, cautious use of overseas platforms
In its announcement, the FSC emphasizes that virtual assets are highly speculative and are not real currencies. They do not possess intrinsic value and their trading prices have no upper or lower limits, making them prone to drastic fluctuations. Therefore, the trading risks are extremely high. The FSC advises the public to fully understand the operation of such assets and carefully evaluate the potential risks before engaging in related transactions.
Furthermore, the FSC specifically points out that for individuals trading through overseas virtual asset trading platforms, they should be aware that these platforms may not be regulated by Taiwanese or foreign laws, and the related transaction information may not be transparent enough. Therefore, the FSC recommends individuals to exercise even greater caution.
However, the FSC’s reminder seems to have come late in the period of Bitcoin’s rise. The FSC did not issue any relevant warnings during the price surge of Bitcoin, only providing risk alerts when Bitcoin showed a downward trend this week. The FSC’s choice of timing has indeed raised doubts among the cryptocurrency market community, questioning whether the FSC’s stance and timing regarding the volatility of virtual asset prices are appropriate.
Banning discussions on BTC investments defeating “time deposits”?
It is worth noting that on March 18th, FSC Chairman Huang Tien-Mu attended a special report and was questioned at the Finance Committee. In response to online influencers advocating for “mortgaging to prevent purchasing ETFs,” Huang Tien-Mu stated that this approach carries high risks, and the rise and fall of ETF constituent stocks is not determined by the issuing institution. Past performance increase does not guarantee future increases.
Huang Tien-Mu revealed that the Investment Trust and Consulting Association is currently working on revising and strengthening self-disciplinary regulations for investment trust businesses and fund sales institutions regarding the behavior of online influencers. In order to cool down the fervor of the 940 billion funds, in the future, online influencers will be required to clearly disclose slogans such as “sponsored by XYZ company” and may even be prohibited from mentioning “defeating time deposits” and “annualized dividend rate” as advertising promotion.
On the other hand, regarding virtual asset platforms, Huang Tien-Mu stated that currently, there are no regulations that can restrict online influencers from endorsing virtual assets. However, the FSC has outsourced research on a special law for virtual assets, and it is expected that the draft law will be released after September this year. It will also refer to international practices and consider whether the draft law for this year should also prohibit online influencers from discussing “annualized dividend rates” of cryptocurrencies.
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