Taiwan Moves Towards Crypto Regulation with New Proposed Bill

Taiwan’s parliament has passed the first reading of a proposed crypto bill, marking a significant step towards regulating the crypto asset industry. This move is intended to address concerns related to the offshore market.

Virtual Asset Management Ordinance Draft Bill

The proposed legislation, known as the Virtual Asset Management Ordinance Draft bill, was co-authored by 17 lawmakers. They argue that crypto assets are distinct from traditional financial products and thus require unique regulations.

The bill aims to establish a regulatory framework and oversight for the crypto industry. The Financial Supervisory Commission (FSC) in Taiwan had previously released guidelines for the sector, but the proposed bill seeks to provide a legal enforceability that was absent in the FSC’s directives.

Addressing Current Regulatory Gaps

Currently, Taiwanese virtual asset service providers are required to comply with anti-money laundering laws. However, the crypto industry remains largely unregulated. The proposed bill aims to change this scenario by establishing operational standards for asset operators, enhancing customer protection, and requiring all cryptocurrency platforms operating in Taiwan to obtain a permit.

The initial version of the proposed bill mandates that exchange operators allow regulators, such as the FSC, to conduct regular inspections of their systems. However, it does not currently take a firm stance on derivatives or stablecoins, nor does it restrict trading of virtual assets to professional investors or explicitly require the use of third-party custodians.

Future Steps

Though an exact timeline for the second reading of the bill is yet to be defined, the FSC is anticipated to contribute its own suggestions to the draft before the next reading. Yung-Chang Chiang, a member of the Legislative Yuan and one of the co-authors of the bill, expressed his hope that the FSC would submit their version of a draft bill to the legislature to allow various sectors of society to further consolidate consensus during the process.