Taiwan's Financial Supervisory Commission lacks corresponding regulations, prosecutors' group strongly criticizes: providing guidance to specific businesses while allowing secondary operators and currency traders to operate unchecked.

The Financial Supervisory Commission (FSC) of Taiwan recently announced stricter regulatory measures for virtual asset operators, sparking widespread discussion. The judicial reform group Judicial Reform Foundation expressed concerns over this policy in a recent statement, fearing it may lead to more legal disputes.

FSC in Taiwan to Introduce New Regulations: Unregistered exchanges to face criminal liability, not just fines

Unregistered Operators to Face Criminal Liability, Prosecutors' Group Warns of Judicial Chaos

The Financial Supervisory Commission (FSC) is planning to amend the Anti-Money Laundering Act and implement a registration system to regulate virtual asset operators. Under the new policy, virtual asset operators conducting business without proper registration will be held criminally liable. While the aim is to strengthen regulation, the Prosecutors' Office has warned that this may lead to more judicial confusion.

Prosecutors' Office: Issues Stem from Administrative Loopholes

The Prosecutors' Office pointed out that Taiwan is facing a significant number of virtual currency fraud cases with heavy losses to victims, making it extremely challenging to investigate these cases. They believe these issues stem from administrative loopholes, causing difficulties for judicial authorities in reconciling and defining legal responsibilities.

The Prosecutors' Office stated, "Judicial authorities find it difficult to define legal duties and criminal intent. For example, in current practice, many individuals accused of being currency dealers argue that they have not violated any rules and were unaware. Recently, there was even a case where a currency dealer involved in a large-scale fraud was acquitted, leaving Taiwan in a state akin to anarchy, with the prosecution almost powerless."

Focus Only on Major Operators, Neglecting Individual Currency Dealers

The FSC's policy seems to lean towards advising only large exchanges and platform operators, while showing little concern for smaller or non-mainstream currency dealers. The Prosecutors' Office criticized this approach for overlooking the broad scope of the market, appearing to be superficial management rather than comprehensive regulation.

"Every meeting focuses on these few operators, ignoring reality. Each department faces a hot potato, avoiding it like the plague. Not only did they change the supervisory unit from the Banking Bureau to the Securities and Futures Bureau, they also discussed dividing virtual currencies into stable and unstable coins, claiming stable coins fall under the responsibility of the central bank."

Shortcomings in New Policy and Administrative Support

The Prosecutors' Office emphasized that the FSC should not only seek criminal responsibility but also establish a comprehensive administrative support system. They pointed out that the current policy and related regulations are confusing in defining virtual currencies, which is unfair to operators and investors and does not contribute to creating a transparent and fair market environment.

Why the Proactive Approach?

The Prosecutors' Office proposed a series of suggestions, including bringing individual currency dealers under formal management and requiring them to comply with clear regulations such as business registration, tax registration, and adhering to KYC procedures. They hope that through these measures, irregularities in the market can be reduced, future legal disputes avoided, and investors' interests protected.

The office will continue to monitor this issue and promote these initiatives in future seminars. They urge the new chairperson of the FSC to abandon old ways of thinking and work together to create a more just and effective regulatory environment.