Key Points:
- Taiwan will enforce stricter Anti-Money Laundering (AML) regulations for crypto companies starting in 2025.
- Crypto firms must register by September 2025 or face heavy fines and potential jail time.
- Taiwan aims to enhance its financial competitiveness, aligning with hubs like Hong Kong and Singapore.
- Illicit crypto transactions from 2019 to 2024 have moved nearly $100 billion, according to a Chainalysis report.
Stricter Crypto Regulations in Taiwan by 2025
Taiwan’s Financial Supervisory Commission (FSC) has officially announced that its newly updated Anti-Money Laundering (AML) regulations for virtual asset service providers (VASPs) will come into full effect by 2025. These changes, initially proposed in March, mark a significant shift in the country’s approach to regulating the crypto industry.
Under the new rules, all cryptocurrency firms operating in Taiwan must register with the government by September 2025 to remain compliant. Failure to do so could result in severe consequences, including fines of up to 5 million New Taiwan dollars (approximately $155,900) and the possibility of a two-year prison sentence. These penalties apply to noncompliant firms or those causing service failures.
The current regulatory system for VASPs in Taiwan will be replaced starting January 1, 2025. Businesses already adhering to existing AML standards will need to update their practices and register under the new guidelines. To avoid confusion, the FSC has advised firms to hold off submitting registration documents until the updated system becomes fully operational.
In addition to mandatory registration, the new regulations require VASPs to submit annual risk assessment reports to the relevant government agencies. By the end of 2024, the FSC aims to release a draft proposal for further crypto-related legislation, with final regulations expected to be implemented by mid-2025.
Taiwan’s Strategy for Financial Growth in the Crypto Sector
Taiwan’s increased focus on AML regulations reflects a broader strategy to strengthen the country’s position in the global financial market. On September 30, the FSC also approved the launch of digital asset exchange-traded funds (ETFs), targeting local professional investors. This move is seen as part of Taiwan’s effort to compete with neighbouring financial centres like Hong Kong and Singapore.
The introduction of tougher AML rules and the push into the digital asset ETF market demonstrate Taiwan’s commitment to attracting more institutional interest in cryptocurrency. The country hopes that these measures will help establish a more secure and competitive financial environment.
The FSC’s initiatives align with the government’s broader goal of ensuring Taiwan’s financial system can keep pace with other global hubs. By offering a more regulated and secure framework for crypto transactions, the country aims to foster a more trustworthy environment for both local and international investors.
Chainalysis Report: A Closer Look at Illicit Crypto Transactions
As Taiwan strengthens its oversight of the crypto industry, global concerns about the movement of illicit funds through digital currencies continue to grow. Chainalysis, a leading blockchain analytics firm, recently published its annual Crypto Crime Report, shedding light on the scale of illegal transactions involving cryptocurrencies.
According to the report, nearly $100 billion in illicit funds have been laundered through crypto wallets since 2019. These transactions are often linked to illegal activities such as scams, exchange hacks, and operations on darknet markets. A significant portion of these funds—around $30 billion—was moved in 2022, primarily involving sanctioned entities, including Russia-based exchange Garantex.
Chainalysis explained that much of this money was moved through conversion services, which allow users to exchange cryptocurrencies for fiat currencies or other digital assets. These services include centralized exchanges, decentralized finance (DeFi) platforms, and even gambling websites. The report highlights the importance of blockchain technology in tracking and analyzing these transactions, as its transparency allows for easier monitoring compared to traditional financial systems.
As regulatory frameworks like Taiwan’s continue to evolve, such reports emphasize the importance of stricter rules in combating the use of cryptocurrencies for illegal activities. The global crypto industry remains vigilant as governments worldwide introduce measures aimed at reducing financial crimes while still fostering innovation in the digital asset space.
Taiwan’s new AML regulations signal a critical shift in the country’s crypto landscape, with significant implications for both local firms and the broader international market. With heightened scrutiny on illicit crypto transactions and increasing competition between financial hubs, Taiwan’s regulatory approach is expected to influence the region’s future in digital finance.
