Foreign media: Can Taiwan become Asia's cryptocurrency safe haven? "It's too early to tell."

According to a report by Coindesk, along with their "imagination," they analyze whether Taiwan can become a cryptocurrency safe haven in Asia after China's crackdown on the crypto space, and whether this will accelerate the development of the cryptocurrency sector in Taiwan.

They use the term "imagination" because their logic associates Taiwan's cryptocurrency sector with China and links them together. From their news categorization method, it is somewhat understandable.

According to the report, as China's crackdown on cryptocurrencies intensifies, people may wonder if Taiwan will become a safe haven for crypto businesses. However, the report concludes, "In fact, not entirely."

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Taiwan's Unclear Regulatory Environment Attracts Blockchain Talent

Why? Reports indicate that whenever Will Tseng, a crypto lawyer in Taiwan, is asked by clients for advice on the best location to set up a crypto company, he recommends Singapore because "Singapore's regulations are clearer."

On July 1, Taiwan's "New Anti-Money Laundering Law" concerning cryptocurrency platforms and trading came into effect. Kenny Chien, founder of Enlighten Law Group, a Taiwan fintech law firm, mentioned that the Financial Supervisory Commission (FSC) selected eight cryptocurrency exchanges as the first phase targets for the implementation of the anti-money laundering law. Among the eight exchanges, three have ceased operations, namely, BitoEX, Joyso, and Starbit. Chien believes this is due to their low trading volume, insufficient profits to sustain operations, and the high cost of regulatory compliance or insufficient time to establish anti-money laundering mechanisms.

Former legislator Jason Hsu, known as the "Crypto Congressman," stated that his proposal to include crypto service providers in the list of entities required to comply with anti-money laundering laws was deemed too stringent by the entire crypto industry. Despite this, in the past year, various decentralized finance (DeFi) and blockchain companies have flooded into Taiwan. Hsu mentioned that crypto companies are establishing their engineering, sales, and marketing teams in Taiwan and hiring local engineers.

"We have successfully attracted a large number of blockchain and crypto talents. However, I believe the question remains: can we retain them? Or will they move to other places like Singapore for better regulatory clarity or a more favorable environment?" Hsu said.

He pointed out that during the pandemic, around 2,000 Gold Cards, a special work visa, were issued to foreign tech entrepreneurs and developers moving to Taiwan. It is unclear how many were specifically granted to crypto developers or businesses, but he mentioned, "Taiwan has about 500 to 1,000 blockchain and crypto-related personnel from outside Taiwan, many of whom are from Silicon Valley."

Compared to Singapore, Taiwan's crypto businesses lack regulatory clarity, and Taiwanese investors are relatively unfamiliar and skeptical about cryptocurrencies. Therefore, "DeFi teams continue to flock to Taiwan, somewhat surprisingly," as reported.

Taiwanese Generally Conservative, View Crypto as Gambling

In fact, after China's financial regulatory authorities banned Initial Coin Offerings (ICOs) and ordered cryptocurrency exchanges in mainland China to cease operations in 2017, Taiwan briefly hyped the idea of becoming a cryptocurrency hub, which never materialized. To this day, Taiwan has made little progress in this regard.

According to Chien, the reason why Chinese crypto companies moved to Taiwan is due to its proximity to the mainland and shared language. However, when the bear market hit between 2018 and 2019, Taiwanese investors and companies suffered significant losses, leading many blockchain companies to exit the Taiwanese market.

Will Tseng believes that ordinary Taiwanese investors are averse to risk and not very familiar with crypto. "Even if they buy, they sell quickly because they perceive the risk as high."

Leo Cheng, co-founder of CREAM, agrees with the conservative views of the Taiwanese. In Taiwan, a lot of money is locked in savings. According to statistics, Taiwan's total savings rate in 2020 was 39.3%. Cheng noted that Taiwanese tend to view crypto assets as gambling tools, with some losing a lot of money in Bitcoin during the downturn in 2018.

Government's Fear of Risk vs. Private Sector's Power

Will Tseng mentioned that one reason for questioning the new anti-money laundering law is the existing Securities Token Offering (STO) rules under Taiwan's Securities Exchange Act, which he finds unreasonable. STO regulations are very strict, and since the law took effect in 2019, only one STO case has been established.

"The regulations stipulate that only professional investors can participate in subscriptions, with a limit of no more than NT$300,000 per investment. The regulations also state that if the funds raised through STO exceed NT$30 million, the issuer must apply for regulatory sandbox experimentation under the 'Financial Technology Development and Innovation Experimentation Regulations,'" Tseng said. "I believe the government made a mistake in these regulations. The Taiwanese government is very cautious about formulating policies for risky assets, so they just want to cut off the risks."

Despite Taiwan's slow and conservative regulation, Leo Cheng is pleased to see new developers and projects continually making Taiwan their home.

Jason Hsu remains optimistic about Taiwan's future as a crypto hub. "With more and more cryptocurrency and other fintech companies emerging, the Taiwanese government really needs to consider how to make this industry more tech-friendly. In other words, you should allow tech companies to enable financial services rather than restrict them."

This article is authorized reprint from Horizon News Network