The Crypto Industry in Taiwan Appreciates Regulation Announcement

Jimmy Aki
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Taiwan has taken bold steps to regulate cryptocurrencies like Bitcoin. This was contained in an announcement made by the chairman of Taiwan’s Financial Supervisory Commission (FSC), Huang Tien-mu, to lawmakers during a meeting on global banking stability.

This is a significant development for Taiwan’s cryptocurrency sector, which up until now has been restricted to crypto regulations to prevent money laundering.

FSC Set to Anchor First Regulatory Sails

The crypto sector is now being taken seriously by experts from around the world because it can potentially impact a nation’s finances negatively.

Regulators are therefore working tirelessly to bring the crypto industry under strict inspection and control to stop fraud or theft against crypto investors.

The report states that the Financial Supervisory Commission (FSC) of Taiwan is expected to be the principal cryptocurrency regulator on the island nation.

Industry players, who have long argued for robust laws that would aid in expanding the sector, hailed the announcement. According to Wayne Huang, CEO of XREX, the industry can only develop when regulated.

Huang also stated that establishing regulatory operations through cooperation between the FSC and the virtual asset service provider sector would be the appropriate next step.

While some members of Taiwan’s parliament have argued that the Ministry of Digital Affairs (MODA) should serve as the major regulator for cryptocurrencies, others have argued that the MODA lacks the expertise of the FSC – one of Taiwan’s two financial regulators.

The Central Bank of the Republic of China (Taiwan’s official name for its apex bank) is the other regulator. The FSC mandate covers everything from banking supervision, securities and futures, and anti-money laundering.

On the other hand, the Central Bank supervises monetary policy and foreign currency laws.

However, it was reported that NFTs wouldn’t come under the FSC’s regulatory cover for the time being. FSC Chairman Huang Tien-mu stated that non-fungible tokens (NFTs) are still in their infancy as an asset class, making it too soon to regulate them.

Huang added that because NFTs are so diverse and can represent a variety of goods – including commodities, securities, and commercial products – it is essential for the FSC to create appropriate NFT classification criteria.

Due to the action, Taiwan will become one of the few nations with full and open cryptocurrency legislation, giving businesses more outstanding stability and legitimacy.

FTX’s Debacle a Huge Catalyst for Taiwan’s Regulatory Interest

Taiwan has historically taken a hands-off stance toward cryptocurrency legislation, regulating the asset class solely to prevent money laundering.

Under the island’s anti-money laundering (AML) compliance mechanism, authorities certified 24 cryptocurrency platforms in September 2022.

However, the subsequent collapse of the Bahamas-based centralized crypto exchange, FTX, in November of that year has since spurred the Asian nation to take a cursory look into the nascent industry.

Taiwanese were one of the major consumers of the FTX exchange per capita, drawn in by its comparatively high-interest rates for USD deposits compared to domestic banks.

In June, a preliminary outline of the bill is expected to be published, with the first draft scheduled for the closing months of 2023.

Taiwan Joins Top Asian Financial Centres in Crypto regulatory

The largest financial hubs in Asia are eager to support the development of the cryptocurrency sector while safeguarding customers and limiting repercussions if things go wrong. Countries like Japan, Singapore, and Hong Kong are all exploring ways to regulate crypto.

Japan had aggressively pursued consumer protection. But more recently, it has loosened the criteria for token listings and promoted a more friendly tone for businesses.

When China outlawed crypto trading and tightened restrictions on mining, Hong Kong asserted its independence and claimed to be open to crypto enterprises. This was done to maintain its position as a major international financial hub.

Although completing strict regulatory requirements may initially prove challenging for crypto companies, there are indicators that rules will continue to loosen.

Meanwhile, existing market participants in Singapore are aware that rules will continue to tighten.

Last year, the collapse of high-profile companies registered in the city-state, including Three Arrows Capital and Terraform Labs, started a regulatory process that appears to lead to more stringent controls.

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.