- Taiwan’s FSC plans to introduce comprehensive cryptocurrency regulation requiring VASPs to obtain permits within 15 months.
- All virtual asset service providers will be classified as financial institutions, effectively ending personal trading.
- Stablecoins will come under joint oversight of the FSC and central bank.
- New legislation will impose varying capital requirements based on VASP business models.
- Draft legislation expected to reach the Legislative Yuan after June 2024 following public consultation.
Taiwan’s financial watchdog is preparing to bring the cryptocurrency industry under its regulatory umbrella, marking a significant shift in how digital assets are overseen in the country. The move comes as part of a broader effort to protect investors following global crypto market turbulence.
The Financial Supervisory Commission (FSC) is crafting legislation that will fundamentally reshape Taiwan’s cryptocurrency landscape. Under the proposed framework, Virtual Asset Service Providers (VASPs) – companies that facilitate crypto trading, custody, and other related services – will need to secure operational permits within a 15-month window after the law takes effect.
FSC Chairman Peng Jin-lung emphasized the strategic importance of stablecoins, stating that these digital assets will serve as a crucial “bridge between fiat money and cryptocurrency.” Stablecoins, which maintain value parity with traditional assets like the US dollar, will be jointly monitored by the FSC and Taiwan’s central bank.
The regulatory push gained momentum following the catastrophic collapse of FTX Trading Ltd in November 2022, which sent shockwaves through the global crypto ecosystem. In response, Taiwan’s Executive Yuan designated the FSC as the primary crypto regulatory authority in March 2023, aiming to prevent similar financial disasters.
To ensure market stability, the FSC will implement tiered capital requirements based on VASP business activities. The commission is particularly focused on asset segregation, requiring operators to maintain strict separation between client and company assets – a crucial lesson learned from the FTX debacle.
The regulatory framework aims to position cryptocurrencies as legitimate alternative investment vehicles while maintaining market integrity. The FSC has announced plans for a public hearing this month, engaging industry stakeholders and academics before finalizing the draft legislation in March.
For cryptocurrency businesses operating in Taiwan, the transition period will be critical. The proposed regulations represent a shift from the current relatively unrestricted environment to a structured financial services framework, where personal trading will be restricted to regulated platforms.
The draft legislation is scheduled for Executive Yuan review in June before proceeding to the Legislative Yuan for final consideration, marking a decisive step in Taiwan’s journey toward comprehensive crypto market oversight.
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