The U.S. Securities and Exchange Commission (SEC) approved the listing of 11 Bitcoin spot ETFs on November 11th. The market is concerned about whether there will be a Taiwanese version of Bitcoin ETF. However, the Financial Supervisory Commission (FSC) stated that according to current regulations, Bitcoin does not belong to securities with value and is not a component that non-ETFs can track. Therefore, fund managers cannot issue Bitcoin ETFs.
On the 11th, the SEC officially approved the listing of 11 Bitcoin spot ETFs from companies such as BlackRock, Ark Investment/21Shares, Fidelity, Invesco, and VanEck. The total trading volume exceeded $4.6 billion on the first day of listing, sparking discussions on whether Taiwan will follow suit and open up.
Domestically, it is not possible to issue Bitcoin ETFs. However, according to the Commercial Times, Huang Hou-ming, Deputy Director of the Securities and Futures Bureau of the FSC, stated on the 11th that according to Article 37 of the Regulations Governing Securities Investment Trust Funds, the index components tracked by ETFs must be “securities” such as stocks, bonds, or other approved securities. However, Bitcoin is not an approved security. According to existing regulations, investment trust companies cannot issue ETFs that track Bitcoin as an investment target.
As for whether domestic fund managers can issue funds to track U.S.-listed Bitcoin ETFs, Huang Hou-ming stated that single-link funds are not allowed. As for portfolio funds (fund of funds), there are currently no relevant regulations, but they still need to be submitted for review.
According to Huang Hou-ming, there are currently no fund managers applying to the FSC to issue funds investing in Bitcoin. However, there are indeed funds investing in Bitcoin-related companies, which do not directly invest in Bitcoin. It is similar to gold funds not investing in gold but in stocks of gold-related companies.
Regarding whether the Regulations Governing Securities Investment Trust Funds will be modified in the future to allow Bitcoin ETFs, Huang Hou-ming pointed out that currently, only the U.S. and Hong Kong have approved the issuance of Bitcoin ETFs. Further research and collection of data from various countries are needed to evaluate whether Taiwan will amend its regulations.
However, Huang Hou-ming emphasized that all funds that want to be issued and sold to investors domestically must apply for approval or filing with the FSC. Therefore, selling Bitcoin ETFs domestically, regardless of whether the funds are domestic or foreign, is illegal.
Can Taiwan buy U.S.-listed Bitcoin spot ETFs? Based on the statements from the FSC, it is unlikely that cryptocurrency ETF products will be available in Taiwan in the short term. However, if Taiwanese investors are interested in investing in U.S.-listed Bitcoin spot ETFs, they can still open accounts with U.S. stockbrokers for investment, covering various types of trading such as U.S. stocks, ETFs, options, futures, bonds, forex, mutual funds, and cryptocurrencies.
As for whether it is possible to invest through securities firms’ sub-custody, the FSC stated that sub-custody is different from soliciting sales domestically, and the FSC is studying whether to allow it. There will be results in the near future.
As for the possibility of launching Bitcoin spot ETFs in Taiwan in the future, industry insiders bluntly say that it is currently impossible because the regulatory authorities in Taiwan still have a lot of discussion on regulating cryptocurrencies. Without supporting measures in regulations, the probability of seeing such products in the Taiwanese market is extremely low.