During the recent surge in the cryptocurrency market, Huang Tianmu, the Chairman of the Financial Supervisory Commission (FSC), warned investors to assess their risk tolerance. He emphasized that if the bubble bursts, the consequences would be severe. As for whether it is feasible for the public to purchase Bitcoin ETFs through securities firms, the results will be announced in April.
Chairman Huang Tianmu attended the Finance Committee of the Legislative Yuan this morning to give a business overview and answer questions. As the FSC is currently the regulatory authority for virtual asset investments, legislators were concerned about cryptocurrency regulation. Huang Tianmu issued a warning to investors amidst the continuous surge in the cryptocurrency market.
Huang Tianmu reminded investors that virtual assets carry significant risks and speculative nature, with substantial fluctuations and no inherent value. Therefore, in September last year, the FSC issued the “Guidelines for Virtual Asset Platform and Trading Business (VASP)” and advised investors to assess their risk tolerance, as severe consequences would follow if the bubble burst.
Regarding the recent surge in Bitcoin, Huang Tianmu believes it is driven by two main factors. Firstly, the U.S. Securities and Exchange Commission (SEC) initially prohibited Bitcoin spot ETFs, but a court ruling last year allowed their listing, which differed from SEC regulations. Secondly, Bitcoin’s automatic halving mechanism leads to increased demand as the supply decreases.
Huang Tianmu mentioned that there are currently 25 cryptocurrency exchanges in Taiwan that have completed anti-money laundering compliance declarations. He advised investors to conduct transactions through compliant domestic exchanges rather than overseas exchanges or unapproved individual exchanges.
In response to virtual currencies becoming a new crime method for fraud groups, and the lenient punishments for individual or overseas exchanges, Huang Tianmu stated that he hopes to impose registration requirements on individual or overseas exchanges according to anti-money laundering laws, similar to domestic platforms.
Regarding the regulation of virtual assets, a legislator asked whether existing regulations like banking laws could be applied. Huang Tianmu responded that the connection between virtual assets and traditional finance should be handled with caution. The collapse of the U.S. cryptocurrency-friendly banks, such as Silvergate Bank and Silicon Valley Bank, resulted from their close connection with virtual currencies. Therefore, the legislative direction will be towards enacting specialized laws rather than linking to existing regulations or regulating through individual provisions. The FSC has started outsourcing research on the feasibility of enacting specialized laws for virtual assets and is expected to present preliminary results in September.
Huang Tianmu stated that the current regulations prioritize the protection of virtual asset investors. Before the specialized laws are completed, major cryptocurrency companies have already begun preparations to establish self-regulatory associations to communicate and deal with related issues.
As for whether Taiwanese investors can purchase overseas Bitcoin ETFs through delegated trading, which has become a concern for legislators, Gao Jingping, the Deputy Director-General of the Securities and Futures Bureau of the FSC, stated that the Securities Association has been asked to study this issue, and the results will be announced in April.
Huang Tianmu mentioned that virtual assets have no intrinsic value but have high volatility. The Securities Association has been asked to study the feasibility of including delegated trading of Bitcoin spot ETFs before the end of April. According to previous reports, after the SEC approved the listing of 11 Bitcoin spot ETFs in January, Taiwanese investors were able to purchase them through delegated trading. However, several Taiwanese securities firms announced on March 23 that they received notifications from regulatory authorities, stating that due to the high price volatility and risks of virtual currency products, they can no longer facilitate the purchase of Bitcoin ETFs through delegated trading.
However, legislator Ko Ju-chun questioned that if securities firms are prohibited from facilitating delegated trading for the public, it will force people to purchase through overseas securities firms, making it more difficult for the government to monitor the public’s investment in Bitcoin ETFs. Securities firms will also lose transaction fee income, and if individuals encounter investment disputes with overseas securities firms, they will have to bear the risks themselves and may even fall into scams without protection, resulting in a three-way loss for the government, securities firms, and the public.
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