Can Taiwan push for Bitcoin spot ETFs and perpetual contracts? Experts gather to discuss!
Since its launch in 2024, Bitcoin spot ETFs have become one of the most important products for U.S. institutions to layout in the cryptocurrency field. Data shows that BlackRock alone manages over 700,000 Bitcoins, gradually approaching the holdings of Bitcoin's creator, Satoshi Nakamoto.
The Bitcoin ETF craze is not limited to Europe and the United States; Hong Kong is the fastest region to launch local Bitcoin and Ethereum spot ETFs, and South Korea's new president, Lee Jae-Myung, has also called for the promotion of ETFs. What about Taiwan?
At the forum on '2025 Virtual Asset Future - Derivative Product Regulatory Policy' held yesterday (7/8) by the Bitcoin and Virtual Asset Development Association, several experts from industry, government, and academia discussed the topic of Taiwan's cryptocurrency spot ETFs, as well as the possibilities, advantages, and obstacles of launching derivative products.
Further Reading:
What are Bitcoin ETFs? Can Taiwan buy them? Understand Bitcoin ETFs at a glance.
Cathay: The biggest challenge for Taiwan's Bitcoin spot ETFs is regulation and definition.
In the United States, Bitcoin spot ETFs are designed to track the performance of Bitcoin prices. The benefit is that there is no need to create a Bitcoin wallet or handle private key issues, as the ETF issuer commissions or establishes an institution to custody Bitcoin, making it suitable for traditional and institutional investors to participate.
However, applying the same model in Taiwan may first encounter challenges related to regulations and the definition of ETF products.
Cathay Investment Trust's Chief Investment Officer Cheng Li-Cheng pointed out that regarding ETFs in the (Securities Investment Trust Fund Management Regulations), it is stated that index stock funds and the component securities of the ETF's underlying index include stocks, bonds, and other securities approved by the authority.
The (Securities Trading Law) also mentions that securities, besides government bonds, corporate stocks, and corporate bonds, also include other securities that can be approved by the competent authority.
Therefore, whether Taiwan can launch local Bitcoin spot ETFs mainly depends on whether cryptocurrencies can be recognized as 'securities.' However, Cheng Li-Cheng pointed out that it is questionable whether cryptocurrencies like Bitcoin, which are native to the blockchain, can meet the traditional definition of securities.
Source: Crypto City Photography, Cathay: The biggest challenge for Taiwan's Bitcoin spot ETFs is regulation and definition.
In fact, there are currently no 'gold spot ETFs' available for investment in Taiwan. Existing products are all futures-type ETFs anchored to foreign gold futures contracts.
Moreover, ETFs usually refer to investing in a basket of products and cannot be concentrated on the same product. Even if a U.S. Treasury ETF is launched, its underlying index components still need to include multiple bonds in total.
Cheng Li-Cheng believes that before overcoming the above two major issues, issuing Bitcoin spot ETFs in Taiwan may still require significant effort.
The government prioritizes sandboxes, and scholars encourage businesses to cooperate more with institutions.
Currently, Taiwan does not have a local Bitcoin ETF, but there are many restrictions for those wanting to invest in Bitcoin ETFs. Initially, only professional investors can invest in various overseas cryptocurrency ETFs through delegated authority.
Lin Meng-Hsiang, an associate professor at Ming Chuan University's College of FinTech, believes that the government is cautiously considering cryptocurrency ETFs and other derivatives and will gradually advance with sandbox and pilot measures. Therefore, he encourages virtual asset service providers to collaborate more with financial institutions.
Even though foreign countries have begun to compare Bitcoin ETFs with gold ETFs, from a regulatory perspective, the risks behind any financial product need to be considered and scrutinized in advance. If the product is ultimately to be pushed towards retail investors, can the relevant legal framework and financial education keep up?
Lin Meng-Hsiang revealed that the current draft of Taiwan's cryptocurrency special law (Virtual Asset Service Act) is somewhat conservative regarding stablecoins, but the reason is obvious since stablecoins involve the final value of fiat currency. If it cannot ensure that stablecoins can establish a precise link with fiat currency, then stablecoins may eventually be worthless.
Further Reading:
Virtual Asset Service Act Draft Summary) Violating Regulation 1 could incur a fine of 200 million, key points on license penalties.
He also suggested that in the advancement of the cryptocurrency special law and the issue of cryptocurrency derivatives, if there are virtual asset service providers wanting to seize potential opportunities, they can start from aspects such as custody, risk disclosure, KYC, combating fraud, and financial education. When discussing ETF-related regulations with competent authorities, they should start with interpretations rather than amendments.
If Taiwan opens local Bitcoin ETFs, what are the potential opportunities and challenges?
If Taiwan truly opens local Bitcoin ETFs, will they successfully become products that attract investors?
Far Eastern International Bank's AI Digital Financial Business Group Vice President Dai Song-Zhi pointed out that Taiwanese people love ETF products, as any new ETF product can attract remarkable funding. The reason behind this is that Taiwan has many high-net-worth clients. Banks hold these clients and have advantages such as compliance, high capital, and high trust, which also help bring these individuals into the market.
Dai Song-Zhi stated that currently, high-net-worth clients want to enter the cryptocurrency market in a compliant manner, especially in the area of real-world asset tokenization (RWA), Taiwan is in a state of service vacancy. If related products can be opened in the future, it will be a great opportunity for Taiwanese banks and local operators.
However, in the absence of a clear cryptocurrency special law in Taiwan, banks must consider many factors when entering the market, especially in terms of asset custody and the allocation of responsibilities in cooperative business. For example, if collaborating with an exchange, but that exchange is hacked, who will bear the responsibility?
Moreover, the banking industry has a significant talent gap in the blockchain field because most individuals familiar with blockchain technology prioritize choosing blockchain-native companies over entering banks. Additionally, the banking industry is still in the process of building trust in the cryptocurrency field, and considerable communication and attempts are still needed.
Further Reading:
CITIC and Fubon have also been approved to enter the market! How do banks custody cryptocurrencies? Key points of the pilot program at a glance.
Cathay Financial Holdings experiments with issuing on-chain bonds! The person in charge reveals the strategy, and the RWA trend has also blown to Taiwan.
MaiCoin points out that Taiwan lacks derivatives, calling for an orderly opening.
From the perspective of local exchanges, Taiwan has long lacked derivative trading businesses and has lost many opportunities to retain customers. Zheng Guang-Tai, CEO of the MaiCoin Group and chairman of the VASP Association, revealed that they are working hard to communicate with the government to explore opportunities for opening relevant products.
Source: Crypto City Photography, MaiCoin points out that Taiwan lacks derivatives, calling for an orderly opening.
Zheng Guang-Tai pointed out that cryptocurrency derivatives actually began to develop several years ago, and many people, when entering the cryptocurrency circle, often first encounter leveraged futures and perpetual contracts. After transferring funds from local exchanges to other offshore platforms, whether they will return to local exchanges is uncertain.
He also revealed that the transaction fees of local exchanges are approximately between 0.1% to 0.2%, and much of the fee income is used for risk management and personnel, making the costs for risk control and compliance very high.
Therefore, if Taiwan can open derivative trading, it will be a great opportunity for local exchanges and can also create a safe environment for investors to trade derivatives instead of risking using unknown offshore platforms. If one unfortunately encounters a fraudulent platform, it could lead to financial losses.
MaiCoin Group CEO Liu Shi-Wei stated that if Taiwan's virtual asset market wants to develop long-term and sustainably, the opening of derivative product businesses is a key step.
Liu Shi-Wei hopes the government can incorporate it into the overall industry development plan and suggests starting with lower-risk dual-currency financial products as a pilot before gradually opening ETFs and other derivative product businesses. The government can also observe market developments through the pilot process as a reference for future improvements to the special law draft.
'Can Taiwan push for Bitcoin spot ETFs and perpetual contracts? Experts reveal the biggest challenges and advantages!' This article was first published in 'Crypto City'.
