The Financial Supervisory Commission (FSC) of Taiwan has unveiled a comprehensive set of guidelines for virtual asset service providers (VASPs), with a primary focus on enhancing customer protection and regulatory compliance within the cryptocurrency industry. This move represents a significant step toward legitimizing the cryptocurrency sector in Taiwan.
Under the newly introduced guidelines, domestic cryptocurrency platforms are mandated to adhere to strict measures to ensure the separation and safe custody of both company and customer assets. Furthermore, these platforms are required to establish clear review standards for the listing and delisting of virtual assets. The FSC also emphasized the need for enhanced information disclosure by VASPs to ensure transparency and consumer confidence.
Registration requirement for offshore exchanges
In a noteworthy development, the guidelines specify that offshore cryptocurrency exchanges seeking to operate within Taiwan’s jurisdiction must undergo registration with the Financial Supervisory Commission.
The guidelines explicitly state that “foreign virtual asset platform operators that have not registered under the company laws and have not declared compliance with anti-money laundering regulations to the FSC may not solicit business within Taiwan or target Taiwanese nationals.” This regulatory move is aimed at ensuring that foreign crypto exchanges operating in Taiwan adhere to local regulations, particularly concerning anti-money laundering (AML) measures.
The FSC also imposed limitations on the operations of cryptocurrency platforms, explicitly stating that they are “not allowed to engage in operations involving derivative financial product transactions with virtual assets as underlying assets or virtual asset businesses with securities-like characteristics.” This restriction aims to maintain stability in the financial markets and prevent excessive speculation within the cryptocurrency space.
Taiwan has been steadily progressing in the regulation of virtual assets and AML compliance. The FSC initially introduced anti-money laundering rules for VASPs in July 2021, setting the foundation for a more robust regulatory framework for the cryptocurrency industry.
Following the official release of these comprehensive guidelines by the FSC, cryptocurrency platforms in Taiwan are expected to come together to form an industry association. This association will be tasked with developing self-supervisory rules based on the FSC’s guidelines. Currently, nine cryptocurrency exchanges in Taiwan have already established a working group in anticipation of the formation of this industry association. Their goal is to submit an application for the association’s establishment by mid-October.
The working group comprises nine prominent firms within the Taiwanese cryptocurrency ecosystem, including industry leaders such as MaiCoin, BitoGroup, and ACE. Winston Hsiao, co-founder and Group CRO of XREX, has taken the role of the working group convener, further highlighting the industry’s commitment to self-regulation and compliance.
Commenting on the FSC’s new guidelines, Wayne Huang, co-founder and Group CEO of Taipei-based crypto exchange XREX, expressed optimism about the future of the cryptocurrency industry in Taiwan. Huang stated that the guidelines could “give birth to a new industry, providing this new industry legitimacy, oversight, a solid path to grow, and an accelerated means to acquire public trust.”
With these guidelines in place, Taiwan is positioning itself as a regional leader in cryptocurrency regulation and consumer protection. By enforcing stringent rules and fostering industry collaboration through self-regulation, the Taiwanese government aims to strike a balance between innovation and safeguarding the interests of investors and consumers in the rapidly evolving cryptocurrency landscape.
As the cryptocurrency sector continues to gain mainstream acceptance worldwide, Taiwan’s proactive regulatory stance serves as an example of how governments can create a secure and transparent environment for digital asset transactions while simultaneously nurturing the growth of this emerging industry. The establishment of an industry association and the adoption of self-regulatory measures are expected to further enhance the credibility and accountability of cryptocurrency platforms operating within Taiwan’s borders.
