TAIWAN Trends and Developments Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
requirements, qualifications for executives and customer protection. Stable coin Nowadays, when discussing the policy aspects of cryptocurrency, stable coin is a topic of heavy debate. Many argue that stable coin should be treated differently from other cryptocurrencies. Nevertheless, the application of current laws and regulations should depend on the specific char - acteristics, framework and models associated with the stable coins. Consequently, the issu - ance and use of stable coins might fall under the jurisdiction of various laws and regulations, such as those governing payments or potentially even securities. The Central Bank of Republic of China (Taiwan) (the “Central Bank” ) issued a report in Decem - ber 2021 expressing concerns about stable coins being used for speculative trading and investment in virtual assets, noting that they are not completely price-stable. The report further emphasises that if the issuance of stable coins is considered as a regulated activity under banking and electronic payment laws, they must adhere to the applicable regulations for banks and electronic payment institutions. Furthermore, a separate report released by the Central Bank in October 2023 argues that stable coins might be viewed as virtual assets with “payment” char - acteristic, potentially leading to their regulation within the electronic payment regulatory frame - work. Furthermore, there has been discussion about whether the regulation of stable coins should be incorporated into the crypto-specific law as indicated above. If included, questions remain regarding who would be allowed to issue sta -
ble coins, including whether local banks could qualify as eligible issuers. Spot bitcoin ETFs? Under Taiwan’s current regulatory regime, Tai - wanese investors can purchase US stocks and related products, including exchange-traded funds (ETFs), through sub-brokerage channels via Taiwanese securities firms. Following the US SEC’s official approval of spot bitcoin ETFs in January 2024, Taiwan’s FSC initially restricted the purchase of US spot bitcoin ETFs through the sub-brokerage method. However, after ongoing discussions between the regulator and industry stakeholders, the FSC issued a press release in September 2024, announcing the permission of professional investors to purchase US spot virtual asset ETFs through the same method. This is subject to specific conditions, including enhanced know-your-customer procedures, risk disclosure, provision of product information by the securities firm, and regular on-the-job train - ing for the securities firm’s personnel. As regards local funds (including ETFs) wishing to include bitcoin in their portfolios, there may be several regulatory restrictions that need to be overcome. Firstly, in a 2014 press release, the FSC ordered local banks not to accept bitcoin as a payment method or provide any other services related to bitcoin. From a policy perspective, this should also apply to securities investment trust enterprises (SITEs). Also, in Taiwan, the types of funds allowed are limited to securities investment funds, real property trust funds, and futures trust funds with a focus on futures and - derivatives, subject to certain exceptions that SITEs and securities firms may form a subsidi - ary to serve as the general partner of a private equity fund under a limited partnership structure. Only entities licensed by the FSC, such as SITEs, banks or futures trust enterprises, are permitted
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