Taiwan's FSC allows professional investors to access foreign virtual asset ETFs, aiming to enhance financial market competitiveness, but still maintains a cautious stance on cryptocurrencies.

Taiwan's Financial Supervisory Commission (FSC) has officially allowed professional investors to participate in foreign virtual asset exchange-traded funds (ETFs) since September 30. The move is seen as Taiwan's efforts to expand product choices and open investment channels for professional investors, while enhancing the competitiveness of the financial market amid the strong development of the global virtual asset market.

The FSC emphasized the need to closely monitor the virtual asset market and focus on risk management and regulatory compliance. This reflects the cautious stance that Taiwan has taken toward digital assets such as cryptocurrencies in recent times, stemming from concerns about fraud risks and price volatility. The FSC has previously issued numerous warnings and implemented strict anti-money laundering measures, especially for cryptocurrency exchanges.

Cautious approach, prioritizing risk management

The Taiwanese government has also shown support for Fintech development through initiatives such as the Fintech Regulatory Sandbox launched in 2018. The initiative allows startups and organizations to test new business models, including in the digital asset sector, without having to comply with full regulatory requirements during the testing phase.

Taiwan’s move to allow professional investors access to foreign virtual asset ETFs is seen as in line with a general trend in global financial centers, including Hong Kong and Singapore. By limiting access to high-risk investments for professional investors, Taiwan aims to strike a balance between access to digital assets and minimizing risks for the market and investors.

The FSC also classifies virtual asset ETFs as high-risk investments and requires companies that want to trade them to comply with regulations related to professional investors. This shows the regulator's caution in managing and controlling risks related to this new type of asset.

Despite its progress in approaching a virtual asset ETF, Taiwan’s central bank remains cautious about the rollout of a central bank digital currency (CBDC). Central Bank President Yang Jinlong has said there is no need to rush into launching a CBDC, preferring gradual progress over competing with other countries.

Taiwan has already developed a CBDC for retail payments and is conducting pilot studies for interbank CBDCs. This approach demonstrates Taiwan’s policy consistency in the digital asset sector, prioritizing stability and risk management, and is consistent with the government’s broader digital policy goals.