Open-end order placement for Bitcoin ETF possible? Peng Jinlong reveals initial access for institutional investors and signing of risk disclosure form

The Bitcoin spot ETF successfully launched in the United States in January and has attracted $13.1 billion in inflows over the past four months, with 11 ETFs having a total asset size of $58.9 billion. Now, there are reports that the Ethereum spot ETF is expected to be quickly approved, indicating the growing interest of traditional investors in cryptocurrencies. However, Taiwan has been unable to buy through a complex custodial arrangement. With the new cabinet taking office, is there a chance for a reversal of the situation?

What is sub-brokerage?

Sub-brokerage, formally known as "Entrusted Trading of Foreign Securities," allows investors to trade foreign stocks without having to open a securities account overseas. Instead, they can use a domestic brokerage with the qualification for sub-brokerage of foreign securities to open a "sub-brokerage account" and trade foreign stocks through this account. When a domestic brokerage receives an order, they place the order with a foreign brokerage. Because the order goes through two actions by domestic and foreign brokerages, it is called "sub-brokerage."

Since it goes through familiar securities and banks in Taiwan, it is easy to retrieve funds in case of unforeseen circumstances. Therefore, sub-brokerage has always been a common choice for Taiwanese investors to invest in foreign securities.

Prohibition leads to a lose-lose-lose situation, disregarding investment rights

Under the existing regulations in Taiwan, Taiwan's mutual funds cannot issue Bitcoin ETFs. The regulatory authority also announced in January that it prohibits the buying and selling of foreign-issued Bitcoin ETFs through the sub-brokerage model, leaving investors to invest in Bitcoin ETFs through overseas brokerages only.

Kuomintang's newly elected legislator, Ke Jyun-ge, who is also a scholar and a cryptocurrency enthusiast, expressed his anger during the Finance Committee's first questioning of Financial Supervisory Commission Chairman Huang Tian-mu on 3/4, criticizing that the prohibition leads to a lose-lose-lose situation, disregarding investment rights.

Possibly opening to corporations first and signing risk disclosure statements

According to a report by UDN News, the newly appointed Financial Supervisory Commission Chairman, Peng Chin-lung, revealed during a briefing today that, referring to experiences abroad, South Korea and Japan have not yet opened up, but Hong Kong and Singapore have. The Securities Association submitted a proposal on April 22, hoping to open under two conditions: firstly, starting with professional investors, namely corporations, and secondly, investors must sign a risk disclosure statement before engaging in sub-brokerage.

After the Securities Association submits the complementary plan, it will be reviewed by the Financial Supervisory Commission. Whether the new cabinet will bring about a new atmosphere remains to be seen.