Nine prominent cryptocurrency companies in Taiwan have taken steps to create an industry association in anticipation of the upcoming cryptocurrency regulations, signifying a noteworthy development in the nation’s crypto industry. This consortium, comprising prominent players such as ACE, BitoGroup, and MaiCoin, is gearing up to navigate the imminent shifts in regulatory dynamics.
While anticipating the need for comprehensive guidelines, Taiwan’s Financial Supervisory Commission (FSC) is poised to unveil crypto trading and payment directives by the end of September 2023. The move comes as the FSC attempts to balance fostering innovation with safeguarding consumer interests.
Emphasis On Consumer Protection
The FSC’s prior mandate on Virtual Asset Services Providers (VASPs) and anti-money laundering (AML) regulations laid a crucial foundation for this proposal. However, recognizing the distinct challenges endemic to the crypto industry, the proposed guidelines are set to introduce a comprehensive framework inspired by Hong Kong’s VASP licensing model.
This holistic approach will provide a robust foundation for crypto market regulation in Taiwan. A notable part of this proposed regulation is consumer safety.
Other notable aspects include enforcing particular ratios for customer deposits in both hot and cold wallets within cryptocurrency exchanges. This step seeks to fortify the security infrastructure surrounding customer funds, instilling a sense of trust and confidence in the industry.
Moreover, the guidelines call for mandatory insurance coverage against user losses, providing an additional layer of assurance to the user base.
Standardization And Global Alignment
The regulatory blueprint further seeks to establish a level playing field by restricting offshore crypto exchanges from operating onshore without securing proper compliance registration. This measure is poised to instil uniformity and standardization for all participants in Taiwan’s crypto market.
Meanwhile, the guidelines extend beyond operational constraints. They also address stablecoins tied to the Taiwanese dollar, proposing a ban to safeguard the financial system’s stability—the country’s stringent restrictions on foreign exchange advertising aim to protect consumers from misleading practices.
The FSC’s approach mirrors global trends, underscoring a dedication to transparency and consumer protection. This commitment is further emphasized by the FSC’s focus on promoting self-regulation in the industry.
In its response, the Ministry of Economic Affairs has carved out a distinct category for digital asset services to accommodate the evolving financial sector landscape. To expedite action regarding adopting these regulatory changes, the nine crypto firms driving the industry association have established a dedicated working group with Winston Hsiao, co-founder of XREX, as its Head.
This group is actively formulating self-supervisory rules aligned with the forthcoming FSC guidelines. Wayne Huang, another co-founder of XREX, is optimistic about the transformative potential of the new FSC guidelines.
The formation of this industry association and the imminent release of the FSC’s guidelines signal a paradigm shift in Taiwan’s crypto landscape. With a unified commitment to regulatory compliance and consumer protection, Taiwan’s crypto market is poised for responsible and sustainable growth on the global stage, exemplifying a balanced approach to innovation and security.