Taiwan to Introduce New Digital Asset Regulations in September 2024
The Financial Supervisory Commission (FSC) of Taiwan has announced its plans to propose a new draft of digital asset regulations for the country in September 2024. The upcoming draft bill aims to establish more effective regulations for digital asset markets and ensure the safety of investors, according to Huang Tien-mu, chairman of the FSC.
Virtual Asset Management Bill Introduced
In October, Taiwanese legislators introduced the Virtual Asset Management Bill in parliament. This bill seeks to provide better protection for customers and proper supervision of the industry. It includes provisions for fines ranging from two million Taiwanese dollars to 20 million Taiwanese dollars for unlicensed virtual asset service providers (VASPs).
Foreign VASPs Prohibited Without Approval
The FSC has prohibited foreign VASPs from offering services in Taiwan without obtaining necessary approvals from the regulator. These regulations were implemented after major cryptocurrency exchanges in the country formed a self-regulatory association to collaborate with regulators.
Taiwan Aims to Enhance Investor Protection and Regulation
Chairman Huang Tianmu stated that the FSC intends to propose a draft bill targeting virtual currencies in September this year. The measure aims to enhance investor protection and regulate the virtual currency business more effectively.
- Huang emphasized the need for stricter regulations to address potential fraud risks associated with digital currencies.
- Merchants attempting to defraud investors will face strict administrative penalties.
- Huang expressed concerns about the increasing interconnection between digital assets and the traditional financial system, highlighting risks posed by digital assets to the stability of legacy financial systems.
- The committee aims to develop laws that protect traditional financial systems from the risks associated with digital assets.
- Both domestic and foreign currency traders would face severe administrative penalties if found guilty of misusing virtual currencies for fraudulent activities.
Taiwan Considers Mainstreaming Bitcoin ETFs
The FSC of Taiwan plans to closely monitor Bitcoin exchange-traded funds (ETFs) to assess their potential and gauge public demand. Research findings based on these assessments will be released in April to determine the future of Bitcoin ETFs in Taiwan. If the findings are positive, Taiwanese investors may be able to resume purchasing overseas Bitcoin ETFs.
- The release of research findings in April will provide Taiwanese investors with more investment options and diversify the market.
- This initiative comes at a time when global demand for Bitcoin ETFs is high, reflecting investors’ increased risk appetite and contributing to Bitcoin’s price reaching $65,000.
Regulator Advises Caution
The FSC advises investors to safeguard their funds and avoid fraudulent schemes by refraining from unregulated foreign investment platforms. Currently, there are approximately ten currency traders in Taiwan specializing in virtual currency transactions.
Industry Guidelines and Self-Regulatory Association
In September 2023, the FSC released industry guidelines for VASPs. The regulator prohibits foreign VASPs from offering services in Taiwan without obtaining necessary approvals. Major cryptocurrency exchanges in Taiwan have formed a self-regulatory association, the Taiwan Virtual Asset Platform and Transaction Business Association, to support the crypto industry and work with regulators.
Hot Take: Stricter Regulations and Mainstreaming Bitcoin ETFs in Taiwan
Taiwan’s Financial Supervisory Commission is taking steps to enhance investor protection and regulate the digital asset industry more effectively. By proposing a new draft bill in September 2024, the FSC aims to establish stricter regulations to address fraud risks associated with digital currencies and protect traditional financial systems from the risks posed by digital assets. Additionally, the FSC is closely monitoring Bitcoin ETFs and plans to release research findings in April. If positive, this could lead to Taiwanese investors being able to purchase overseas Bitcoin ETFs and further diversify the market.
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