Taiwan tightens virtual currency regulations, FSC Chairman Huang Tien-mu: Special legislation results expected in September

Taiwan's cryptocurrency trading platforms have recently been experiencing instability, drawing widespread attention. Among them, "ACE Elite Exchange," one of Taiwan's top three exchanges, is currently under investigation by law enforcement for suspected involvement in a fraud case. This incident highlights the challenges and progress in virtual asset management in Taiwan.

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Financial Supervisory Commission Accelerates Taiwan's Virtual Asset Regulation

Chairman of the Financial Supervisory Commission (FSC), Huang Tien-Mu, stated on the 30th that Taiwan may not be a pioneer in virtual asset management, but it is taking a gradual approach. Huang mentioned that Taiwan's progress, from anti-money laundering measures to establishing regulatory principles and assisting industry players in forming associations, is in line with international standards. Although his term ends on May 19, the exact implementation time of the special law is still unpredictable. However, external experts have been commissioned to study the feasibility of a special law on virtual assets, with results expected by September.

FSC Strengthens Supervision of Virtual Asset Platforms

According to Huang, the FSC has been the regulatory authority for Virtual Asset Service Providers (VASPs) since early last year and has required operators to make compliance declarations. He emphasized that the FSC is strengthening supervision of these platforms through inspections and daily communication.

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Regulatory measures Taiwan has taken

On September 26 last year, the FSC issued ten guiding principles for VASPs and supervised Security Token Offerings (STOs) with investment attributes. Huang mentioned that since November last year, the FSC has started anti-money laundering inspections on operators to ensure compliance with these principles.

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Taiwan's Regulatory Strategy in Comparison with International Standards

Huang acknowledged that Taiwan is not leading in virtual asset management, but he emphasized that the anti-money laundering measures, regulatory principles, and formation of industry associations are in line with international standards. He pointed out that many countries also base their management on anti-money laundering laws.

Association expected to be established in the first quarter of this year

In response to concerns from lawmakers that the FSC only requires operators to adhere to self-regulatory norms, Huang responded that the FSC has convened larger virtual asset industry players for discussions and plans to establish an association in the first quarter of this year to enhance consumer protection.

Ensuring the Special Law is Forward-Looking

Regarding the establishment of the future special law, Huang revealed that feasibility studies on a special law for virtual assets have begun, and management scope and depth from other countries will be referenced. He particularly emphasized the hope that the team entrusted with this task will have a long-term vision, considering not only past developments but also anticipating future changes to ensure that the draft law is forward-looking, comprehensive, and diverse.

Can the Special Law be Achieved?

FSC Chairman Huang Tien-Mu has indicated that his term ends in May, but the evaluation of the outsourced special law is expected to be completed by September, with many variables likely in between.

In addition, members of the association preparatory group have successively withdrawn due to scandals, and in the future, there may be disqualifications due to financial inspections or law enforcement actions. With public confidence generally lacking, the persuasive power of the association's self-regulation may decline.

If there is a real opportunity to introduce a special law, the existing guiding principles and association self-regulatory norms will inevitably need further adjustments and increased penalties.