Strategic Partnership Sees BitKeep Add Mantle Network Support

The Financial Supervisory Commission (FSC) of Taiwan has disclosed its intention to introduce a fresh draft of digital asset regulations for the nation come September 2024. The forthcoming draft bill seeks to establish more robust regulations for digital asset markets, prioritizing investor safety, as announced by Huang Tien-mu, the chairman of FSC. That’s according to a March 4 report by local media outlet, United Daily News (UDN).Photo by Kelly Sikkema on UnsplashAddressing customer protectionIn October, Taiwanese legislators introduced the Virtual Asset Management Bill to parliament, a move aimed at fortifying customer protection and ensuring effective industry supervision. The bill encompasses provisions that could impose fines ranging from two million Taiwanese dollars ($63,000) to 20 million Taiwanese dollars on unlicensed virtual asset service providers (VASPs). Around that time, the authorities had a particular concern with regard to the operation of foreign and offshore VASPs within the Taiwanese market. Like Hong Kong, Taiwan also had seen some negative impact due to the fraudulent activity of the Dubai-based JPEX crypto platform.The FSC has already barred foreign VASPs from operating in Taiwan without requisite approvals from the regulator. These measures were instituted following the establishment of a self-regulatory association by major cryptocurrency exchanges in the country, aiming to foster collaboration with regulators. Stricter regulationsPer the latest report, Chairman Huang Tien-mu outlined the FSC's plan to propose a draft bill targeting virtual currencies in September of the current year. This initiative seeks to bolster investor safeguarding and enhance regulatory oversight over the virtual currency sector. Concern has also been raised relative to native exchanges, in addition to offshore VASPs. In November, an investigation was opened into the Bitgin exchange, amid alleged money laundering activity. Shortly afterwards, another probe was launched into the ACE Exchange, amid allegations of money laundering and fraud. Highlighting the imperative for stricter regulations, Huang underscored the potential fraud risks tied to digital currencies. He issued a stern warning, signaling severe administrative penalties for merchants engaged in fraudulent activities aimed at investors. Moreover, the regulator expressed concerns about the growing interconnection between digital assets and the conventional financial system. He emphasized the need for laws to shield the stability of traditional financial systems from the inherent risks posed by digital assets. Addressing apprehensions regarding the misuse of virtual currencies for fraudulent endeavors, Huang cautioned of stringent administrative penalties awaiting both domestic and foreign currency traders found guilty. ETF considerationsTaiwan's Chamber of Commerce is poised to unveil a study on Bitcoin exchange-traded funds (ETFs) in April. Gao Jingping, Deputy Director of the Securities and Futures Bureau at the Financial Supervisory Commission, indicated Taiwan's contemplation of endorsing spot Bitcoin ETFs under regulatory oversight. However, he advised against investing in foreign crypto-based exchange-traded products. Reports from local media in December suggested that the FSC will closely monitor Bitcoin ETFs to assess their potential and gauge public demand. The FSC intends to release research findings in April, which will influence the fate of Bitcoin ETFs in Taiwan. Positive findings may pave the way for Taiwanese investors to resume acquiring overseas Bitcoin ETFs. This initiative unfolds amid heightened global demand for Bitcoin ETFs, which recently contributed to Bitcoin's surge to almost $69,000.

Korea Exchange sets the stage for security token tradingStarting next year, South Koreans may have the opportunity to trade security tokens, as the Korea Exchange (KRX), the sole securities exchange operator in the country, has officially begun preparations to establish a security token market. The Busan Digital Asset Exchange (BDX), slated for launch next year, is expected to play a pivotal role in spearheading the growth and development of this emerging security token market.Photo by Tierra Mallorca on UnsplashSeeking approval from financial regulatorsAs reported by local news outlet Busan Ilbo, KRX applied to the FSC last month for registration as an innovative financial service under the financial regulatory sandbox scheme. On Nov. 19, the FSC approved the creation of pilot markets for investment contract securities and non-cash trust beneficial certificates. KRX’s recent initiative is a follow-up to this development. The financial regulator is set to make a final decision after holding a main committee meeting to review KRX’s application.Investment contract securities and non-cash trust beneficial certificates represent two distinct types of security tokens. Investment contract securities provide a means for fractional investments in real-world assets (RWAs). This can include a diverse range of assets such as artworks, music copyrights, beef and carbon credits, allowing investors to own a portion of these assets. On the other hand, non-cash trust beneficial certificates function as secondary investment instruments. These certificates enable individuals to invest in financial products that themselves have invested in security tokens, offering an indirect pathway to participate in the security token market.Fractional investments on the horizonVarious industries are poised to benefit from the emerging digital market, especially platforms focused on fractional investment in artworks. Companies like Yeolmae Company, Art Together and Seoul Auction Blue are keen on this opportunity and have applied to the FSS for permission to register security tokens. Upon receiving regulatory approval, these platforms plan to accept subscription requests, enabling investors to participate in the art market in a more accessible way.The development of security token markets is expected to positively impact BDX, which is currently seeking an operator. Initially, when BDX’s operation plan was unveiled in September, it excluded security tokens due to regulatory constraints. However, with KRX now involved, it’s more probable that the Busan exchange will feature security tokens as major trading assets. Experts believe the success of these token exchanges will largely depend on the quality and appeal of the underlying assets.A local securities industry official emphasized the significant role of the security token market in enhancing the stature of Busan as a blockchain hub. The growth of this market is seen as pivotal in boosting the value and utility of BDX. The official noted that BDX’s appeal to investors would increase if it offered a diverse range of underlying assets or unique security tokens. This development could mark a significant turning point for Busan in the blockchain industry.

Taiwan weighs up CBDC following feasibility study completionTaiwan’s central bank, the Central Bank of the Republic of China (Taiwan), recently concluded an in-depth feasibility and technology study on the potential implementation of a wholesale central bank digital currency (CBDC).Photo by Timo Volz on UnsplashGathering feedback and refining designAccording to statements made by Deputy Governor Chu Mei-lie while speaking at an annual event organized for the banking sector by the Financial Information Service Co., an entity that oversees Taiwan’s banking, payment and settlement systems, Chu disclosed that the central bank is now in the process of gathering feedback and refining the design of the CBDC platform.In her keynote speech, Chu underscored the significance of CBDCs in the evolving landscape of digital currencies. She concurred with the Bank for International Settlements’ (BIS) assertion that conventional payment tools and platforms may not always meet the demands of all-day transactions, smart contracts and automatic settlements facilitating simultaneous and irreversible transfers of assets or funds.Supporting asset tokenizationChu emphasized that a nation’s monetary system should be poised to support tokenized assets. CBDCs, she suggested, could potentially offer comprehensive payment and settlement services, integrating tokenization and a unified ledger that harmonizes CBDCs with traditional currencies.The concept of a unified ledger, as explained by Chu, doesn’t imply a single ledger but rather that tokenized ledgers of each economy could coexist and connect through an application interface.This approach aims to ensure interoperability, minimizing the risk of errors in message transmission. Interoperability is also being worked on by financial messaging service SWIFT. It recently collaborated with central banks in Hong Kong and Kazakhstan with a view towards testing a connector that would enable the integration of SWIFT with CBDCs.Additionally, a unified ledger is anticipated to expedite the clearing process, foster a secure trading environment and ensure the safe, reliable and effective execution of currency and asset transactions.International integration of e-CNYChu acknowledged that foreign central banks are actively exploring the feasibility of issuing CBDCs to establish a unified value for all forms of currency. Of the many early-stage CBDC projects that are out there, China’s e-CNY has gathered the greatest momentum.British bank Standard Chartered has been the most recent entity to join the Chinese CBDC international pilot project. Taiwan’s Fubon Bank has enabled its customers to top up e-CNY via mobile banking. The leading CBDC currency has similar collaborations in place with Hong Kong banks, HSBC and Hang Seng Bank.Fubon has also gotten involved alongside Ripple in a pilot program run by the Hong Kong Monetary Authority. Through that collaboration, it is supporting an asset tokenization trial that revolves around Hong Kong’s CBDC, the e-HKD.Chu outlined that in the case of Taiwan, the matter of a CBDC is being pursued cautiously, without a predefined timetable for reaching a conclusion. The monetary policymaker plans to engage in discussions with academic and business sectors to inform its stance on CBDCs.Meanwhile, the central bank is committed to enhancing overall planning related to the CBDC platform, focusing on transaction ease, capacity and innovative functionalities. Chu also highlighted the consideration of offline transaction scenarios in this ongoing process.