Taiwan introduces the Virtual Asset Management Bill to regulate the cryptocurrency industry with obligations for service providers and potential fines.
Key Takeaways
- Taiwan’s Legislative Yuan introduces the Virtual Asset Management Bill.
- The bill aims to enhance customer protection and industry supervision.
- It imposes obligations on virtual asset service providers (VASPs).
- Stablecoin issuer requirements and advertising rules remain unspecified.
On October 25, Taiwan’s legislative body, the Legislative Yuan, introduced the Virtual Asset Management Bill. This new legislation is designed to bolster customer protection and establish proper supervision within the crypto industry.
Customer Funds
The 30-page bill outlines a series of measures expected from virtual asset service providers (VASPs). These include segregating customer funds from the company’s reserve funds, implementing an internal control and audit system, and affiliating with local trade associations.
However, notable aspects of the bill remain undefined. It does not mandate stablecoin issuers to maintain a 1:1 ratio of reserve funds, nor does it address algorithmic stablecoins. Marketing regulations are left to the discretion of the “competent authority.”
Taiwan introduces crypto bill to Parliament
On October 25, lawmakers in Taiwan introduced the Virtual Asset Management Bill in the country's legislative body, the Legislative Yuan. The purpose of this bill is to offer enhanced protection for customers and establish proper… pic.twitter.com/zYexzkXRgr
— DARKNESS (@dark_of_ness_) October 27, 2023
Taiwan’s FSC
The bill also introduces penalties for unlicensed VASPs, ranging from a minimum of two million Taiwanese dollars (approximately $60,000) to a maximum of twenty million ($600,000). Existing companies operating in Taiwan’s crypto market will have a grace period of six months to obtain a license once the bill becomes effective.
In a related development, Taiwan’s Financial Supervisory Commission (FSC) released industry guidelines for VASPs in September 2023. The FSC explicitly prohibits foreign VASPs from offering their services in Taiwan without obtaining the necessary approvals from the regulator.
These regulatory measures come as a response to the formation of a self-regulatory association by major cryptocurrency exchanges in Taiwan. On September 26, local exchanges, including Maicoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito, joined forces to establish the Taiwan Virtual Asset Platform and Transaction Business Association. Their primary objective is to support the crypto industry and collaborate closely with regulators.
To Conclude
Taiwan’s introduction of the Virtual Asset Management Bill signals a proactive approach toward regulating the crypto industry while ensuring customer protection. While the bill places certain obligations on VASPs, some critical details, such as stablecoin issuer requirements and marketing rules, are yet to be determined. The cooperation between local exchanges and regulators through the formation of the Taiwan Virtual Asset Platform and Transaction Business Association is a positive step toward fostering a more transparent and compliant crypto ecosystem in the country.
