On October 25, a significant development unfolded in Taiwan’s legislative landscape as lawmakers introduced the Virtual Asset Management Bill to the unicameral parliament, the Legislative Yuan. This proposed legislation carries a dual objective: enhancing customer protection and further ensuring effective supervision of the burgeoning crypto industry.
Common-Sense Obligations for VASPs
Notably, the 30-page bill outlines a series of common-sense obligations for Virtual Asset Service Providers (VASPs). Key provisions include the segregation of customer funds from the company’s reserve funds, the establishment of robust internal control and audit systems. Furthermore, a mandatory membership in the local trade association.
However, the bill, at this juncture, refrains from imposing a 1:1 reserve fund ratio on stablecoin issuers and remains silent on algorithmic stablecoins. Marketing activities fall under the purview of rules to be determined by the “competent authority”. This will further introduce a level of flexibility in promotional efforts within the industry.
Fines and Licensing Framework
In the event of non-compliance, VASPs operating without a license may face fines. This ranges from a minimum of 2 million Taiwanese dollars (approximately $60,000) to a maximum of 20 million TWD ($600,000). Existing market players in Taiwan will have a six-month window post-bill enactment to obtain the necessary licensing.
Preceding Guidelines and Self-Regulatory Initiatives
This move follows the release of industry guidelines for VASPs by Taiwan’s Financial Supervisory Commission (FSC) in September 2023. The FSC, in a proactive measure, restricts foreign VASPs from offering services in Taiwan without obtaining requisite approvals from the regulator.
Against the backdrop of these regulatory developments, major cryptocurrency exchanges in Taiwan have taken the initiative to form a self-regulatory association. Notably, on September 26, key players united to establish the Taiwan Virtual Asset Platform and Transaction Business Association. They include MaiCoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito.
Their collective goal is to bolster the crypto industry while actively collaborating with regulatory authorities.
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