Taiwan Releases Crypto Guidelines as It Tightens Regulation

Jimmy Aki
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Taiwan’s Financial Supervisory Commission (FSC) has recently issued directives to safeguard customer interests within the cryptocurrency space.

A New Direction for Taiwan’s Crypto Community

On Tuesday, Taiwan’s financial regulatory authority introduced an extensive set of directives aimed at virtual asset service providers (VASPs), covering several key objectives.

This includes enhancing customer protection through transparency, secure asset custody practices, and reinforcing internal controls and management within financial firms.

In the official statement, the FSC outlined several significant requirements for local cryptocurrency platforms. These requirements include the compulsory segregation and secure custody of company and customer assets.

The regulator also called for the establishment of clear criteria governing virtual asset listing and delisting, with a substantial emphasis on enhanced information disclosure.

In addition, the commission has mandated that crypto issuers must provide a whitepaper. Meanwhile, foreign entities operating within Taiwan must adhere to local registration procedures in compliance with corporate and anti-money laundering regulations before they are authorized to serve customers.

The FSC was designated in March 2023 as the regulatory authority for virtual asset platforms with financial investment or payment characteristics.

However, the regulatory body had, in June 2021, issued a guideline that required VASPs to adhere to anti-money laundering law.

The guideline was tagged “Measures for Preventing Money Laundering and Combating Terrorism Financing by Virtual Currency Platforms and Trading Businesses.”

As of September 2022, the authority had approved 24 cryptocurrency platforms within the country’s anti-money laundering compliance system.

Nevertheless, the sudden collapse of FTX heightened the need for stringent regulation in Taiwan.

This urgency was due to the fact that Taiwanese citizens constituted roughly 3% of the exchange’s collapse victims. Taiwan was listed as the seventh most affected country.

Taiwan’s Crypto Sector Prepares to Organize Ahead of New Regulation

Following the release of official guidelines by the FSC, nine cryptocurrency platforms in Taiwan are taking proactive steps to establish an industry association. The aim is to create an association and develop self-regulatory rules based on these newly released guidelines.

In a joint announcement on Tuesday, these cryptocurrency companies revealed their intention to pursue the formation of an industry association by mid-October 2023. They have also put together a working group to expedite this process.

The working group comprises prominent exchanges in Taiwan, including MaiCoin, BitoGroup, and ACE. Winston Hsiao, the co-founder and Group CRO of XREX, is leading the working group.

The preliminary plan outlined by the working group indicates that once the industry association is established, it intends to cover a broader spectrum of cryptocurrency firms.

This will include over-the-counter (OTC) trading platforms, wealth investment platforms, custody service providers, and quantitative trading companies.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.