Taiwan Takes Regulatory Leap with Introduction of Crypto Bil
Taiwan is setting its sights on regulating the cryptocurrency industry with the recent introduction of the Virtual Asset Management Bill to its unicameral parliament, the Legislative Yuan. This bill marks a significant step forward in defining and supervising virtual assets and their service providers.
The 30-page Virtual Asset Management Bill, which has passed its first reading, reflects a balanced approach to regulating the crypto space. It mandates reasonable obligations for virtual asset service providers (VASPs), including the separation of customer funds from the company’s reserve funds, the establishment of internal control and audit systems, and membership in local trade associations. This approach aims to enhance customer protection and oversight while fostering industry growth.
One noteworthy aspect of the bill is its lack of stringent requirements regarding stablecoins. Unlike some countries, Taiwan does not demand a 1:1 reserve ratio for stablecoin issuers, providing flexibility for the industry. Additionally, algorithmic stablecoins are not explicitly mentioned in the bill.
Regarding advertising and marketing activities, the bill delegates authority to the “competent authority” to set the rules, maintaining a degree of flexibility to adapt to evolving industry practices.
VASPs operating without a license will face significant fines, ranging from no less than 2 million Taiwanese dollars (approximately $60,000) to a maximum of 20 million TWD ($600,000). Existing companies in the Taiwanese market will have a six-month window to obtain a license once the bill takes effect.
Taiwan’s Financial Supervisory Commission (FSC) had already taken steps towards crypto regulation in September 2023 when it released guidelines for VASPs. These guidelines prohibit foreign VASPs from offering services in Taiwan without obtaining the necessary approvals from the regulator. This move by the FSC and the subsequent introduction of the Virtual Asset Management Bill demonstrate Taiwan’s commitment to creating a comprehensive regulatory framework for the cryptocurrency industry.
The crypto industry in Taiwan has taken an active role in shaping its regulatory landscape. Several prominent cryptocurrency exchanges in the country formed the Taiwan Virtual Asset Platform and Transaction Business Association to promote self-regulation and collaboration with regulators.
While this draft of the bill doesn’t delve into specifics like Proof of Reserves, it sets the stage for regulatory standards to be developed collaboratively with the industry. These standards may play a crucial role in shaping the future of the crypto industry in Taiwan.
As discussions progress, and the bill moves toward a second reading, it remains clear that Taiwan is dedicated to providing a regulatory environment that fosters innovation and safeguards consumers, striking a balance between industry growth and investor protection. The crypto world is watching closely as Taiwan sets its course in the ever-evolving landscape of digital assets.