In a bid to strengthen regulation and protect customers in the cryptocurrency industry, Taiwanese legislators have introduced the Virtual Asset Management Bill in the country’s parliament. The bill aims to establish clear guidelines for virtual asset service providers (VASPs) while promoting industry growth.
Key provisions of the bill
The Virtual Asset Management Bill includes several important provisions:
- Customer Protection: The bill emphasizes the importance of safeguarding customers’ funds by requiring VASPs to separate customer funds from their reserve funds, ensuring transparency and security.
- Regulatory Obligations: VASPs are expected to establish internal control and audit systems to ensure compliance. Joining the local trade association is also encouraged to promote self-regulation within the industry.
- Stablecoins and Advertising: The bill does not mandate stablecoin issuers to maintain a 1:1 reserve ratio, allowing flexibility in this aspect of regulation. The rules for advertising will be determined by the competent authority, providing flexibility in marketing activities.
- Licensing and Fines: VASPs operating without a license may face fines ranging from 2 million to 20 million Taiwanese dollars. Existing market players will have a six-month window to obtain the required license once the bill becomes law.
Prior efforts in self-regulation
The introduction of the Virtual Asset Management Bill follows the establishment of the Taiwan Virtual Asset Platform and Transaction Business Association, which represents major cryptocurrency exchanges in Taiwan. The association aims to guide the industry, set standards, and engage with regulators.
In September 2023, Taiwan’s Financial Supervisory Commission (FSC) issued industry guidelines for VASPs, restricting foreign VASPs from operating in the country without obtaining necessary approvals from the regulator.
Binance’s registration application in Taiwan
Binance, one of the largest cryptocurrency exchanges globally, has expressed its intention to register in Taiwan, demonstrating its willingness to comply with local regulations. Binance had previously operated in the country through a local entity called Binance International Limited Taiwan Branch (Seychelles).
These recent developments highlight Taiwan’s evolving approach to cryptocurrency regulation, aiming to strike a balance between industry growth and necessary oversight for customer protection. The cryptocurrency landscape in Taiwan continues to evolve, as evidenced by collaborations such as the ‘Points-to-Crypto’ service launched by Circle, BitoGroup, and Taiwan FamilyMart.