Taiwan's Financial Supervisory Commission officially announces VASP guidance principles, regulating both "domestic virtual asset service providers" and "foreign virtual asset service providers."

The Financial Supervisory Commission (FSC) of Taiwan officially released guidance principles, which include ten major items, with specific focus on "individual currency trader" and "overseas currency trader" sections, compared to the previous draft version.

Financial Supervisory Commission of Taiwan Announces VASP Guidance Principles

1. The Financial Supervisory Commission (FSC) has been designated by the Executive Yuan as the competent authority for virtual asset platforms with financial investment or payment nature since March of this year. In line with international regulatory trends, the FSC is gradually strengthening the protection of customers' rights and interests in domestic virtual asset platforms.

2. The FSC previously issued the "Anti-Money Laundering and Counter-Terrorist Financing Measures for Virtual Currency Platforms and Trading Businesses" on June 30, 2021. Building on anti-money laundering regulations, the FSC has now formulated and published the "Guidance Principles for Managing Virtual Asset Platforms and Trading Businesses (VASP)" (hereinafter referred to as the Guidance Principles; see attached document). These principles aim to enhance customer protection by focusing on aspects such as trading information transparency, customer asset custody methods, platform operator internal control management, and external expert assistance. The key points are summarized as follows:

1. Management of virtual asset issuance: If virtual assets are issued through the platform, the issuer should publish a whitepaper on its website (with specific disclosure requirements) and the platform should provide a link to the website.
2. Review mechanism for listing and delisting virtual assets: Establish review standards and procedures for the content of whitepapers related to virtual assets and incorporate them into the internal control system.
3. Segregation custody of platform assets and customer assets: The platform should segregate and safeguard customer's legal tender or virtual assets received for virtual asset trading and fund collection and payment business from its own assets.
4. Trading fairness and transparency: Develop virtual asset trading rules and disclose them, as well as establish mechanisms to ensure fair market trading.
5. Contract formulation, advertising solicitation, and complaint handling: Platforms should adhere to principles of fairness, reciprocity, equality, and integrity to implement customer protection provisions.
6. Operation system, information security, and management mechanism of hot and cold wallets: Establish management systems for continuous operation, information security, and private keys of hot and cold wallets.
7. Information disclosure: Platforms should fully disclose information on virtual asset issuance, product listing and delisting, asset segregation custody, trading information and rules, and customer protection.
8. Internal control and institutional audit: Platforms should establish internal control and internal audit mechanisms and ensure that their operations are independent and objective, and agree to on-site inspections by the FSC or commissioned institutions.
9. Individual currency dealers: Natural persons engaging in virtual asset businesses who declare compliance with anti-money laundering regulations to the FSC must provide statements of content and quality equivalent to those of legal entities.
10. Overseas currency dealers: Overseas virtual asset platform operators who have not registered in accordance with company law and have not made a declaration of compliance with anti-money laundering regulations to the FSC are prohibited from conducting business solicitations within the territory of Taiwan or targeting Taiwanese nationals.

3. Following the publication of the aforementioned Guidance Principles, VASP operators will be encouraged to promote industry self-discipline. VASP-related associations will formulate self-regulatory norms based on the content of the Guidance Principles to guide operators in strengthening internal controls and further enhancing customer rights protection.

4. In light of recent unlawful incidents on foreign virtual asset trading platforms and the high volatility and speculative nature of virtual asset prices, the FSC reminds the public to carefully assess the risks when trading virtual assets.

Review Draft: Interpreting the Taiwan FSC Draft Guidance Principles - Overseas operators can no longer advertise?

Preparatory Committee of Associations Led by Three Major Exchanges, Expected to Apply for Establishment by Mid-October

In early September, operators established the Preparatory Committee of the Taiwan Virtual Asset Platform and Trading Business Association (VASP), which has united resources and manpower in the preliminary stages and is expected to apply for establishment by mid-October. Qualified members include not only exchanges and currency exchanges but also extend to off-exchange trading platforms, C2C trading platforms, financial investment platforms, wallet custodians, and quantitative trading operators, among others.