Taiwan bans the use of umbrella trading to purchase virtual currencies and related securities; Bitcoin spot, futures, and ETFs are all under regulation.

The highly anticipated Bitcoin spot ETF has finally been successfully listed in the United States, with a seven-day net inflow of $1 billion and assets under management reaching $25.9 billion, indicating the enthusiasm of traditional investors for Bitcoin spot ETFs. However, it is now reported that several securities firms in Taiwan have stated that they can no longer purchase through omnibus accounts, cutting off the legitimate channel for investors in Taiwan to invest in Bitcoin.

What is Sub-brokerage?

Sub-brokerage, formally known as "Entrusted Trading of Foreign Securities Business," allows investors to trade foreign stocks without the need to open a securities account overseas. Instead, investors can open a "Sub-brokerage Account" through domestic securities firms that have the qualification for sub-brokerage of foreign securities, and use this account to buy and sell foreign stocks. After receiving the order, domestic securities firms place the order with foreign securities firms. As the order goes through two actions by domestic and foreign securities firms, it is referred to as "Sub-brokerage."

Due to the familiarity with Taiwan's securities and banking system, if any unexpected events occur, it is also easier to retrieve funds. Therefore, sub-brokerage has always been a common choice for Taiwanese investors to invest in foreign securities.

Taiwan not only cannot issue, but also prohibits trading through sub-brokerage

According to announcements from securities firms, in addition to regulatory restrictions, Taiwan's mutual funds cannot issue Bitcoin ETFs, and regulatory authorities have also prohibited trading foreign-issued Bitcoin ETFs through sub-brokerage. As a result, investors can only invest in Bitcoin ETFs through overseas securities firms.

Keeping up with the Bitcoin ETF trend in the U.S.? FSC Securities Bureau Deputy Director: Unable to issue domestically

The announcement from Yuanta Securities explains:

The regulatory authority has notified that considering the high volatility and risks of virtual currency products, for investor protection, for entrusted trading of foreign securities linked to virtual currencies such as Bitcoin, only sell orders are temporarily accepted and new buy orders are not accepted.

In accordance with Article 44, Paragraph 4 of the Securities Trading Law of the Republic of China in 1991, the "Regulations Governing the Entrusted Trading of Foreign Securities by Securities Firms" were promulgated, officially allowing securities firms to handle the business of entrusted trading of foreign securities, enabling investors to globally allocate their assets through the trading of foreign securities. In 2016, it opened up the scope of non-professional investors to trade foreign securities, including non-leveraged or short gold ETFs.

According to industry insiders, originally ETFs only specified the underlying assets for non-professional investors, but since Bitcoin ETFs became a news focus, the FSC had to make a statement. The Securities Association was still investigating yesterday which Bitcoin ETFs are currently being sold in Taiwan and the current balances.

What are the alternatives for trading Bitcoin ETFs?

Without the sub-brokerage channel, Taiwanese investors can only trade Bitcoin ETFs through accounts opened with overseas securities firms! Although now opening an account does not require flying overseas, as long as you have your passport ready, you can apply directly online. However, the downside is that you need to transfer money overseas and communicate directly with overseas securities firms in case of any issues. But the advantage is that the fees are much lower than sub-brokerage, and some even allow trading in funds, futures, or options.

Regarding overseas investment options, Mr. Market has a comprehensive introduction, so interested friends may want to research online before making a decision.

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