Taiwan Takes Bold Steps in Crypto Regulation with New Draft Bill
Taiwan introduces a crypto bill to the Legislative Yuan, aiming to define virtual assets, set operational standards, and ensure customer protection, all while opening the door to future crypto-specific regulations.
Taiwan has taken a pivotal step forward in digital asset regulation, presenting a crypto bill to the Legislative Yuan for its first reading. The Virtual Asset Management Ordinance Draft bill aims to establish clear definitions for virtual assets, set standards for asset operators, ensure customer protection, and emphasize membership in industry associations. This is a departure from Taiwan’s previously laissez-faire approach, where crypto was largely governed by existing know-your-customer and anti-money laundering laws.
The collapse of the FTX crypto exchange last November accelerated the country’s urgency towards a more robust regulatory framework. The draft bill, while not heavily focusing on derivatives or stablecoins, does recognize the distinct nature of derivatives linked to virtual assets, such as perpetual contracts. This opens the door for potential crypto derivative regulations in future versions of the bill.
Unlike Japan, which mandates third-party custodians for exchanges, Taiwan’s draft focuses on separating customer assets from business funds. It further requires exchange operators to produce periodic reports on their operations, allowing consistent regulatory oversight by entities like the Financial Supervisory Commission (FSC).
The bill also hints at future regulations on asset ratios, emphasizing consultations with the industry for setting standards. Wayne Huang, CEO of Taipei-based fintech XREX, has emphasized the importance of collaboration between the industry and the FSC to shape regulatory guidelines.
The timeline for the bill’s second reading remains open-ended, potentially extending beyond January 2024.
In conclusion, Taiwan’s proactive introduction of the crypto bill indicates its commitment to creating a stable and secure digital asset landscape. This balanced approach, focused on both operational standards and investor protection, is set to elevate the region’s crypto industry, benefiting stakeholders and reinforcing the sector’s integrity.
