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The Financial Supervisory Commission (FSC) in Taiwan has disclosed its close examination of foreign cryptocurrency futures products and exchange-traded funds (ETFs), signaling a potential shift in its regulatory approach.According to a <a href="https://www.ctee.com.tw/news/20231205700057-430301" rel="noopener noreferrer nofollow">report</a> in Chinese-language financial newspaper, Taiwan’s Commercial Times, the FSC aims to gradually ease restrictions, aligning its stance with global market conditions.<h2 id="header-0">Responding to crypto ETF activity internationally</h2>The Taiwanese regulator is carrying out this exploration against the backdrop of significant global developments. The possibility of the Federal Reserve cutting interest rates and the upcoming review by the U.S. Securities and Exchange Commission (SEC) of the spot bitcoin ETF in January next year are key factors influencing the FSC’s considerations.The anticipation surrounding the Bitcoin halving in April, combined with speculation that a spot bitcoin ETF approval is imminent in the U.S., have contributed to a 145% surge this year in Bitcoin’s unit price, adding momentum to that regulatory contemplation in Taiwan. There has been speculation that BlackRock, the world’s largest fund manager, is already<a href="https://decrypt.co/208672/blackrock-bitcoin-etf-seed-funding" rel="noopener noreferrer nofollow"> preparing</a> for the approval of its iShares Bitcoin Trust ETF.Recognizing the potential impact of a Bitcoin index stock fund, contingent on SEC approval and subsequent public investment permission, the FSC is closely monitoring global trends.Closer to home, it <a href="https://medium.com/&#64;coinness.gl/hong-kong-regulators-consider-opening-up-crypto-etfs-to-retail-50c14b88380b" rel="noopener noreferrer nofollow">emerged</a> last month that Hong Kong’s Securities and Futures Commission (SFC) is actively exploring the possibility of permitting retail participation in a spot crypto ETF. Domestic investment banks in Taiwan, attuned to these developments, have expressed longstanding interest in introducing similar crypto products.The FSC draws parallels with global counterparts, citing the proliferation of cryptocurrency futures products and ETFs in various markets.<h2 id="header-1">Cautious regulatory review</h2>Adopting a phased approach, the FSC emphasizes self-discipline and standards in relaxing regulations around crypto ETFs. This cautious strategy aligns with Taiwan’s historical prudence, previously observed in the delayed approval of cryptocurrency ETFs and blockchain ETFs due to concerns over volatility and speculative nature.As Taiwan contemplates a significant move into the cryptocurrency ETF domain, industry players remain cautiously optimistic. While some had considered private placements for overseas cryptocurrency ETFs, challenges such as tightened regulatory supervision and concerns over errors and price lags prompted a reevaluation.Earlier this month, ETF issuer ProShares <a href="https://www.businesswire.com/news/home/20231102679012/en/ProShares-Launches-World%E2%80%99s-First-Short-Ether-Linked-ETF" rel="noopener noreferrer nofollow">launched</a> its short Ether-linked ETF product on the New York Stock Exchange’s Arca, using the ticker symbol SETH. Spot bitcoin ETFs have been launched in Canada, Germany, Australia and Brazil. The products have also been made available via tax havens such as the Cayman Islands, Jersey, Liechtenstein and Guernsey.The regulator in Taiwan hints at a potential strategy involving “cryptocurrency concept ETFs.” These funds could invest in cryptocurrency-related software and hardware vendors, offering investors exposure to the industry without direct linkage to cryptocurrency price fluctuations.

Taiwan to review crypto ETFs amid developments overseas

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