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Upcoming Regulatory Framework in Taiwan Sees Crypto Exchanges Unite

Policy & Regulation·September 27, 2023, 1:08 AM

In preparation for the impending arrival of a regulatory framework for cryptocurrencies in Taiwan, nine prominent cryptocurrency firms have announced their collective efforts to establish an industry association.

The nine exchange businesses announced the development via a press release which was published on Tuesday. The move comes in anticipation of Taiwan’s Financial Supervisory Commission (FSC) releasing comprehensive guidelines on cryptocurrency trading and payments by the end of September.

Photo by Timo Volz on Unsplash

 

Developing regulatory environment

The industry body will include participation from native exchanges such as MaiCoin, BitoGroup, and ACE. While Taiwan has been behind the regulatory curve until now where crypto is concerned, the one measure that the FSC had already taken steps to mandate was that virtual asset services providers (VASPs) in Taiwan must adhere to the country’s anti-money laundering (AML) regulations. However, numerous other intricacies unique to the cryptocurrency industry still require careful consideration and regulation.

Authorities in Taiwan have also put forward ten guiding principles for VASPs, designed to protect Taiwanese consumers.

The forthcoming guidelines aim to address these concerns by introducing a comprehensive set of rules inspired by the VASP licensing framework in Hong Kong. One of the primary focuses of these proposed guidelines is consumer protection. They advocate for specific hot and cold wallet ratios for customer deposits with cryptocurrency exchanges, a measure designed to safeguard customer funds. Additionally, the guidelines suggest mandatory insurance against user losses to further enhance consumer confidence.

Moreover, the FSC’s guidelines intend to prevent offshore cryptocurrency exchanges from operating onshore in Taiwan without proper compliance registration. This step aims to ensure that all participants in Taiwan’s cryptocurrency market adhere to uniform standards.

In a bid to stabilize the Taiwanese financial system and prevent deceptive advertising practices, the guidelines also propose a ban on stablecoins linked to the Taiwanese dollar and impose restrictions on foreign exchange advertising within the country.

 

Enabling self-regulation

Regulators have also proposed the classification of crypto regulations within their own novel business category. As part of that initiative, officials expressed an interest in fostering self-regulation. The formation of this industry group could be deemed to be an encouraging sign relative to that aspiration.

The nine cryptocurrency firms forming the industry association have established a working group led by Winston Hsiao, Co-Founder of XREX. This group aims to expedite the development of self-regulatory rules based on the forthcoming FSC guidelines.

Wayne Huang, another Co-Founder of XREX, expressed his hope that the new FSC guidelines will provide the cryptocurrency industry with legitimacy, oversight, a clear growth trajectory, and an accelerated path to earn public trust.

The formation of this industry association, coupled with the impending release of the FSC’s comprehensive regulatory guidelines, marks a significant milestone for Taiwan’s cryptocurrency sector. As the industry evolves, these proactive measures seek to ensure its stability, security, and compliance with international standards.

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