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Cryptocurrency News Articles
Taiwan’s FSC Unveils New Measures to Govern Professional Investors’ Engagements in Crypto ETFs and Virtual Assets
Sep 30, 2024 at 10:51 pm
The Financial Supervisory Commission (FSC) in Taiwan recently introduced new measures to govern the engagements of professional investors.
Taiwan’s Financial Supervisory Commission (FSC) has introduced new measures to govern the engagements of professional investors.
These regulations will allow professional investors to invest in foreign crypto ETFs and other virtual assets through re-entrustment.
The decision is expected to increase the diversification of investment opportunities and help Taiwan’s securities firms strengthen their re-entrustment operations.
However, due to the high risks involved in crypto ETFs, the FSC has limited this investment product to professional investors.
Professional Investors Limited to Foreign Crypto ETFs
The FSC has classified investments in virtual asset ETFs as highly risky and volatile. As a result, it has limited this investment product to professional investors, including institutional investors, high-net-worth individuals, legal entities, and other high-asset clients.
This measure is designed to ensure that only those investors with the necessary knowledge and experience in these investments are permitted to participate.
To invest in crypto ETFs, professional investors will be required to prove their professional status to securities firms.
The firms, in turn, must consider the investors’ awareness of virtual assets and their previous experience in these investments.
By implementing these steps, the FSC aims to protect the investors and encourage responsible investment schemes.
However, the FSC noted that these investments are not open to individual retail investors. The focus remains on permitting only those who are competent enough to deal with the complexities of the revamped virtual asset markets. This move is intended to protect inexperienced investors from exposure to high-risk virtual asset ETFs.
Strict Regulations for Securities Firms
Securities firms offering foreign virtual asset ETFs are required to establish a product suitability system, which must be approved by their board of directors.
The system will assess what each client knows about virtual assets and their experience in investing before allowing them to participate in these complex products.
This requirement is designed to help the firms provide the right instruments to professional clients.
Moreover, before making their first investment in virtual asset ETFs, firms must deliver product details of virtual assets in a form and manner understandable to non-institutional professional investors.
This way, investors are fully aware of the dangers and characteristics of the virtual asset ETFs they invest in. In addition, clients must complete a risk warning letter so that they do not claim ignorance when making their first investment.
The FSC also requires that securities firms provide their business personnel with continuing education and training on virtual assets and related products.
This requirement helps make sure that people from the firms know the business, services, and products and are qualified to give their clients good counsel.
The commission will continue to supervise the management of foreign virtual asset ETF investments by Taiwan’s securities firms.
This element is aimed at maintaining order to follow new regulations adequately and protect shareholders’ rights. This is why the FSC wants to focus on the regulation and continue to improve the regulations if necessary.
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