- The Bill focuses on customer protection, regulatory obligations, and industry self-regulation.
- Major crypto exchanges in Taiwan had previously formed the Taiwan Virtual Asset Platform and Transaction Business Association.
- Taiwan’s Financial Supervisory Commission (FSC) also recently issued industry guidelines for VASPs.
In a recent move to enhance oversight and customer protection in the cryptocurrency industry, Taiwanese legislators introduced the Virtual Asset Management Bill to the unicameral parliament, the Legislative Yuan, on October 25, 2023.
The bill aims to establish clear guidelines for virtual asset service providers (VASPs) while fostering industry growth.
Key provisions of the bill
The 30-page bill outlines several important provisions:
- Customer Protection: The bill emphasizes the need for better customer protection within the cryptocurrency industry. It requires virtual asset service providers to separate customer funds from their reserve funds, ensuring transparency and security.
- Regulatory Obligations: VASPs are expected to establish internal control and audit systems to maintain compliance. Joining the local trade association is also encouraged to foster industry self-regulation.
- Stablecoins and Advertising: Notably, the bill does not mandate stablecoin issuers to maintain a 1:1 reserve ratio, showing flexibility in this aspect of regulation. Additionally, the rules for advertising are to be determined by the competent authority, granting flexibility in marketing activities.
- Licensing and Fines: VASPs operating without a license face fines ranging from 2 million to 20 million Taiwanese dollars. Existing market players have a six-month window to obtain the required license after the bill becomes law.
Prior attempts by industry participants to self-regulate
The introduction of the Virtual Asset Management Bill closely follows the creation of the Taiwan Virtual Asset Platform and Transaction Business Association, which represents a collaborative effort by major cryptocurrency exchanges in Taiwan.
MaiCoin, BitoGroup, Ace Exchange, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito joined forces to support the cryptocurrency industry and engage with regulators. The association was created with the aim of guiding the industry, setting standards, and building consensus.
In September 2023, Taiwan’s Financial Supervisory Commission (FSC) issued industry guidelines for VASPs, restricting foreign VASPs from operating in Taiwan without obtaining necessary approvals from the regulator.
The FSC’s move underscored the government’s commitment to providing regulatory clarity.
Binance’s registration application in Taiwan
Binance, one of the world’s largest cryptocurrency exchanges, sought registration in Taiwan, signalling its willingness to comply with local regulations. Binance had previously operated in the country through a local entity, Binance International Limited Taiwan Branch (Seychelles).
🇹🇼 #Binance will apply for registration in Taiwan
The largest cryptocurrency exchange Binance intends to obtain registration in Taiwan in accordance with the Anti-Money Laundering Law.
According to the register of the Taiwan Ministry of Commerce, in May this year, the… pic.twitter.com/Jum73kjgn1
— Iren Barnes (@IrenCryptoQueen) August 11, 2023
These developments collectively reflect Taiwan’s evolving approach to cryptocurrency regulation, aiming to balance industry growth with necessary oversight and customer protection. The cryptocurrency industry’s landscape in Taiwan continues to evolve, seeing that Circle, BitoGroup, and Taiwan FamilyMart recently partnered to launch ‘Points-to-Crypto’ service in the country.