Taiwan Introduces Virtual Asset Management Bill
The Taiwanese legislators have recently presented the Virtual Asset Management Bill to the Legislative Yuan, aiming to enhance customer protection and industry supervision. The 30-page bill proposes several sensible obligations for virtual asset service providers (VASPs), including the segregation of customer funds from company reserves, establishment of internal controls and audit systems, and participation in local trade associations.
Key Points of the Bill
While the bill suggests various measures, it does not currently require stablecoin issuers to maintain a 1:1 ratio of reserve funds, nor does it mention algorithmic stablecoins. The regulations regarding marketing activities will be determined by the “competent authority.”
If passed, VASPs operating without a license could face fines ranging from 2 million to 20 million Taiwanese dollars ($60,000 – $600,000). Existing companies in the Taiwan market will have six months to obtain a license once the bill becomes effective.
Industry Guidelines and Self-Regulation
In September 2023, Taiwan’s Financial Supervisory Commission (FSC) released industry guidelines for VASPs. The FSC also prohibits foreign VASPs from offering services in Taiwan without obtaining necessary approvals from regulators.
Meanwhile, major cryptocurrency exchanges in Taiwan have come together to form a self-regulatory association called the Taiwan Virtual Asset Platform and Transaction Business Association. This association includes exchanges like MaiCoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito. Their objective is to support the crypto industry and collaborate with regulatory bodies.
Hot Take: Striking a Balance Between Regulation and Innovation
Taiwan’s Virtual Asset Management Bill represents an attempt to strike a balance between protecting customers and promoting innovation in the cryptocurrency industry. By introducing obligations for VASPs while allowing some flexibility in areas like stablecoin reserves and marketing regulations, the bill acknowledges the importance of oversight without stifling growth. Additionally, the formation of a self-regulatory association by major exchanges showcases their commitment to responsible practices and collaboration with regulators. As Taiwan takes steps to establish a regulatory framework for virtual assets, it sets an example for other jurisdictions grappling with similar challenges.
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