Taiwan Pioneers New Crypto Regulation Framework
Taiwan has taken a significant step in the field of cryptocurrency regulation by introducing an initial draft of legislation.
Yung-Chang Chiang, a key member of the Legislative Yuan and a collaborator in the creation of this legislation, expressed that following the successful first reading of the bill, discussions on the framework for regulating the virtual asset industry have progressed to the next stage. The Financial Supervisory Commission’s upcoming draft bill is anticipated to further solidify consensus across various sectors during the legislative process.
Notably, Taiwan’s Financial Supervisory Commission (FSC) recently issued guidelines encouraging the cryptocurrency sector to establish its self-regulatory guidelines by forming an industry association. However, it is essential to emphasize that these guidelines lack legal binding. Chiang pointed out in a recent parliamentary hearing that the authority conferred by this unique law enables regulatory bodies to impose administrative penalties on operators who violate the self-regulation rules. Without such a distinctive legal framework, regulators would be unable to enforce penalties.
The proposed special crypto law, introduced by Chiang and 16 other lawmakers, mandates that all cryptocurrency platforms operating within Taiwan must apply for a permit. Those failing to comply may be subject to regulatory actions, including potential orders to cease their operations.
The exact timeline for the bill’s second reading remains uncertain, with Chiang’s office suggesting it may not occur before January 2024, coinciding with the conclusion of the current term for all Taiwanese lawmakers.
Currently, Taiwan has required virtual asset service providers to adhere to anti-money laundering regulations introduced by the FSC in July 2021. In the absence of comprehensive legislation, the cryptocurrency industry in Taiwan has largely operated without regulatory oversight.