The 2024 Taipei Blockchain Week (TBW 2024) had its grand opening today (12/12). From the first edition's "Bridge" that connected Taiwan's Bit Block chain with the world, to the second edition's "Scale" that became a 5,000-person event, this year's "Onboard" focuses on the real-world application of Bit Block chain. For this annual Taiwan Bit Block chain event, Taipei Mayor Chiang Wan-an also took the stage to deliver a speech, emphasizing the Taipei City Government's supportive attitude towards emerging technologies.
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ToggleTaipei Mayor Chiang Wan-an Discusses Technology Vision
Taipei City is actively promoting a 5-year, NT$10 Bit budget for smart city innovation, encouraging government agencies to adopt AI technology, facilitate cross-department collaboration, and create more smart city application cases.
Chiang Wan-an stated that Taipei's vision is to become a global leader in AI and Bit Block chain technology. He hopes to provide a platform for young people to unleash their potential and accelerate Taiwan's transformation into an Asian innovation hub. At the same time, the city government is committed to digital transformation, aiming to work with the industry to turn Taipei into an open and innovative technology center.
Fintech Association Chairperson Tsai Yu-ling Explains Taiwan's Regulatory Landscape
At the same event, Tsai Yu-ling, the Honorary Chairperson of the Taiwan Fintech Association, provided a comprehensive analysis of the regulatory blueprint for Virtual Asset Service Providers (VASPs) in Taiwan. As an advisor to the Taiwan Virtual Currency Association Preparatory Group, she detailed the latest developments and strategies in Taiwan's virtual asset regulation.
Tsai Yu-ling pointed out that Taiwan has adopted a phased approach to regulation, aiming to create a favorable environment for the virtual asset industry while protecting investor interests. This strategy can be summarized in the following key stages:
Stage 1: Establishing Anti-Money Laundering (AML) Measures
In November this year, Taiwan officially passed amendments to the Money Laundering Control Act, bringing VASPs and third-party payment providers under regulation and outlining detailed penalties, which is more clear-cut compared to the previous process of AML compliance statements.
Stage 2: Industry Collaboration and Self-Regulation
Tsai Yu-ling emphasized that the key in the second stage is to bring together industry participants to jointly develop self-regulatory norms. The Taiwan Virtual Currency Association has played a crucial role in this stage, organizing industry representatives to discuss and formulate industry standards.
Taiwan's virtual asset self-regulatory norms were publicly released at the end of November, with detailed regulations on investor protection, asset security, internal governance, and information transparency. There are also stricter requirements for KOLs and media in terms of content regulation and risk disclosure. Tsai Yu-ling stated that the self-regulatory norms are not only the industry's own regulatory language, but have also been approved by the government, which can address the government's concerns.
Third Stage: Industry Registration Comes into Effect
The latest regulations in Taiwan require Virtual Asset Service Providers (VASPs, note) to formally register when operating in Taiwan. Unregistered operators may face up to 2 years in prison and a fine of up to 5 million. The purpose of this stage is to ensure that all service providers are included in the regulatory framework, increasing the overall transparency and reliability of the industry.
At the same time, the Taiwan Financial Supervisory Commission (FSC) is also continuing to conduct financial inspections on VASPs, having already penalized platforms such as MaiCoin, Bitopro, Rybit, and ACE Exchange this year, indicating that regulation is tightening.
Note: VASPs include exchanges, conversion platforms, custodians, asset transfer providers, and underwriters.
Fourth Stage: Establishing a Basic Regulatory Framework
In this stage, the Taiwan FSC will begin drafting regulations related to virtual assets, laying the foundation for comprehensive future supervision, with a focus on establishing basic compliance requirements and regulatory principles.
As previously reported by Crypto City, FSC Chairman Deng Jinglong revealed that the specialized law on virtual asset management is expected to be submitted to the Executive Yuan in June 2025 to begin the legislative process.
What are the Guiding Principles for Virtual Asset Service Providers (VASPs)?
Tsai Yu-ling detailed the specific requirements for VASPs, first that all VASPs must join the Taiwan Virtual Currency Association, which helps establish industry self-regulatory rules, a comprehensive information security management system, and protect customer data and asset security.
VASPs must also set up trust accounts to ensure the safe segregation of customer funds, and formulate detailed customer protection policies, including complaint handling mechanisms and asset tracing procedures, as well as implement strict Know Your Customer (KYC) processes to prevent money laundering and illegal transactions.
Taiwan to Begin Pilot Virtual Asset Custody Business Next Year
In addition to regulatory norms, Tsai Yu-ling also mentioned that from January to April 2025, the FSC will begin piloting "virtual asset custody business", where custodians are not limited to VASPs, as financial institutions (FinTech companies) can also apply for registration, and she mentioned some key regulatory points:
- Custody service providers need to be registered with differentiation based on the degree of asset control
- Must establish a comprehensive asset reconciliation mechanism
- Need to formulate clear customer asset protection policies
Tsai Yu-ling: Optimistic About Taiwan's Regulation, Gradually Improving
Tsai Yu-ling is optimistic about the future of Taiwan's virtual asset industry. She emphasized that the current regulatory framework is an evolving process, with the government and industry continuously collaborating to improve the regulatory system. Taiwan is trying to strike a balance between risk control and industry innovation, aiming to establish a regulatory environment that can both protect investors and encourage technological innovation. Through a phased and collaborative regulatory approach, Taiwan hopes to set a benchmark in global virtual asset regulation, demonstrating a regulatory wisdom that combines openness and prudence.
(This article is authorized for reprint from Crypto City)
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