April 21, 2024

Taiwan is taking a deeper step in deciding its position regarding crypto exchange-traded funds (ETFs). The country’s key financial regulator, the Financial Supervisory Commission (FSC), is now contemplating allowing crypto ETFs in the region. 

However, the regulator noted that it is still ‘in the exploratory phase.’  This involves analyzing the development and trend of ETFs in major markets across the world.

Taiwan Regulator To Review The Progress Of Crypto ETFs Globally Before Stepping In

On December 5, the Taiwanese local news outlet, the Commercial Times, reported about how the regulator is still on a defensive stance. The report revealed that the FSC has initiated a closer look at the developments of crypto ETFs in some prominent countries.

For instance, the regulator is monitoring the trend in the United States. Notably, the US Securities and Exchange Commission (SEC) is expected to evaluate and approve applications for spot Bitcoin ETFs in January next year.

Also, other countries like Australia and Canada already have some local exchanges that provide crypto ETF services. Apart from monitoring the countries, the FSC has noted the launch of several digital asset futures products listed on some platforms. 

These include the likes of the New York Stock Exchange, Toronto Stock Exchange, NASDAQ Exchange, Hong Kong Stock Exchange, Cboe, and others. But while Taiwan reviews its stance on the aspect of crypto ETFs, crypto enthusiasts in the country are becoming cautious in their anticipation. 

Some digital asset investors contemplate opting for private investment packages of crypto ETFs overseas. However, they seem to reconsider such moves due to challenges such as tightened jurisdictional regulations, calculation errors, and price lags.

The FSC Seeks The Adoption Phased Approach For ETFs

The FSC insisted on following a phased pattern that will revolve around self-discipline and laid out standards. Such an approach will aid the regulator in making sound regulations for crypto ETFs.

Moreover, the regulator’s careful and diligent strategy is an extension of the country’s historical prudence in crypto-related decisions. 

This is reflected in Taiwan’s delay in cryptocurrency and blockchain ETFs over concerns about volatility and speculative attributes. Hence, Taiwanese regulators have stood against initiatives from local investment banks on crypto ETFs over the past years.

However, the FSC disclosed that the authorities could support a new plan like crypto concept ETFs.

Such a digital asset product will potentially support investments in crypto-related software and hardware vendors. Additionally, it would offer investors more opportunities to partake in the digital asset industry without direct exposure to the associated price volatility.

Impressively, Taiwan has started boosting the regulatory developments for its crypto sector. In October, the country’s lawmakers introduced a 30-page document as the Virtual Assets Management Bill tagged ‘the Legislative Yuan’.

The bill demands simple obligations from virtual asset service providers (VASPs).

These include the separation of clients’ assets from the firm’s funds and the set-up of functional internal control and audit units. Additionally, the bill demands that VASPs should be fully registered and part of the local trade association. Also, stablecoin issuers shouldn’t hold a 1:1 ratio of reserve funds.

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