Taiwan’s Financial Supervisory Commission (FSC) has announced that it will take charge of regulating cryptocurrencies in the country, becoming the primary regulator in this space. The decision was revealed to parliamentarians during a discussion on global banking stability. The FSC’s new cryptocurrency legislation is expected to be released in June 2023, with a draft set to be released later this year.
Crypto Regulation following the FTX Bankruptcy
Taiwan’s interest in regulating cryptocurrencies was further accelerated by the bankruptcy of FTX, which led to increased concerns about the safety and security of cryptocurrency exchanges. The collapse of the exchange also highlighted the urgent need for Taiwan to develop a regulatory framework for cryptocurrencies. The country has one of the largest user bases of the exchange per capita.
Crypto Regulations in Taiwan
The FSC will initially focus on regulating cryptocurrency exchanges that provide asset trading services. The FSC’s Banking Bureau is consulting with crypto exchange operators to develop regulations. Taiwan previously regulated cryptocurrencies under the framework of controlling money laundering.
In July 2022, the FSC issued a note to the banking industry, instructing them not to grant virtual asset providers the status of merchants in operations with credit card holders. This note represented a ban on buying crypto with a credit card on the island. The note also warned the Association of Banks about the speculative and risky nature of virtual assets.
Exclusion of NFT Regulation
The FSC confirmed that it would not be regulating NFTs as an asset class, as they are still emerging. Officials from XREX, a Taipei-based TradeTech fintech, discussed the extendibility and composability of NFTs, as well as their ability to represent a broad range of assets, such as commercial products, securities, and commodities. XREX officials called on the virtual asset service provider industry to help develop a set of rules and to work with the FSC to define regulatory operations.
Regulation by the FSC
The FSC will become the primary regulator of cryptocurrencies in Taiwan, with the Central Bank of the Republic of China continuing to specialise in monetary policy and foreign exchange regulations. The FSC oversees banking regulation, securities and futures, and anti-money laundering initiatives.