Exclusive | Highlights of the Virtual Asset Regulatory Public Hearing: Calls for Establishing Dedicated Authority, Binance Application Still Under Review

On September 7th, the Taiwan regulatory public hearing was convened by Legislator Guo Guowen. Exclusive access to the public hearing records of the "Bitcoin and Virtual Currency Development Association" revealed suggestions and improvements from industry, government, and academic experts regarding the "FSC Guidance Principles."

Exclusive: Legislator Guo Guowen hosts Taiwan regulatory public hearing, with representatives from Binance/Bitfinex present.

Review of the FSC Guidance Principles draft: Interpreting the FSC Guidance Principles draft

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Government Representatives: FSC / MOEA / Ministry of Justice / Criminal Investigation Bureau

FSC: "Crypto Special Law" Takes Too Long, Revising Self-Regulation Rules More Practical

The Financial Supervisory Commission (FSC) leading the "guiding principles" noted that while there are opinions in favor of creating a special crypto law, it is time-consuming, suggesting that industry self-regulation may be more effective. Currently, in the self-regulation draft, some industry players question the ability of auditors to audit digital assets, as well as the reluctance of insurance companies to underwrite the risks of businesses, which are still subjects for discussion.

MOEA: Focus on Promotion and Guidance, Not Supervision

Many believe that the Ministry of Economic Affairs (MOEA) may be more friendly in managing Taiwan's crypto industry. However, MOEA stated that its main focus is to promote various technologies across industries and provide guidance to businesses.

Therefore, expecting Minister without Portfolio Audrey Tang to manage Taiwan's crypto industry may not be easy.

Ministry of Justice / Criminal Investigation Bureau: Targeting Regulation of Individual Currency Traders, No Need for Tiered Management

While some over-the-counter (OTC) operators believe that individual currency traders should be managed separately from exchanges to avoid excessive regulation, due to the prevalence of fraud and money laundering, the Ministry of Justice believes that they should be regulated under the same standards. The Criminal Investigation Bureau further argues that self-regulation by the industry alone cannot prevent crime and calls for clear oversight.

Industry Representatives: Maicoin / Binance

Maicoin Calls for Special Law, High Cost of Asset Segregation

Chen Ming-hui, COO of the exchange Maicoin, expressed the desire for regulatory oversight through a special crypto law and suggested managing industry players and products in a tiered manner. Regarding the requirement for asset segregation, it is believed that it would significantly increase costs, leading to operational challenges. Additionally, in dealing with foreign players, Maicoin advocates for supporting foreign currency traders to establish themselves in Taiwan but under the same regulatory standards. This aligns with their earlier interview: "Interview | Taiwan's September Regulatory Upgrade! How do major compliant exchanges in Taiwan view industry self-regulation and competition from overseas players?"

Binance Shares International Anti-Money Laundering and Regulatory Experience

Binance representatives proposed adopting an auditor verification system based on the Japanese experience. They also suggested alternative solutions to the challenges in the insurance system. Binance also shared its expertise in anti-money laundering techniques and experiences for the Taiwanese industry to consider.

Scholar Representatives: Divergent Opinions on Division of Responsibilities? Special Law? Special Agency?

Professor Li Kun-chang from Soochow University believes that the FSC's regulation of Virtual Asset Service Providers (VASPs) akin to public companies lacks clarity. He emphasized the need for government attention to the development of trading platforms to prevent Taiwan from becoming marginalized. He suggested: "Separating guidance and supervision, recommending the FSC be responsible for supervision, with the MOEA acting as a guidance body to avoid conflicts of interest."

Associate Professor Tsang Cheng-yun from National Chengchi University believes, "Disputes over virtual assets are not suitable for segmented discussions and should be collectively addressed to avoid conflicts between various departments." He proposed establishing a "Financial Technology Bureau" and discussing which matters can be self-regulated or externally regulated.

Associate Professor Hsu Pei-ling from the Institute of Financial Management at the China University of Technology mentioned the possibility of a special law, suggesting that enacting a special law to encompass all forms would reduce the difficulty of compliance for businesses. She also questioned why stablecoin issuance was excluded.

Association Representatives: Call for Flexible Regulation, Friendly to Domestic and Foreign Players

Taiwan FinTech Association – Chairperson Cai Yu-ling

Taiwan's focus on regulation lacks clear industry development policies, and there is a hope for more proactive industrial policies.

Deputy Secretary-General of the Taiwan Virtual Asset Anti-Money Laundering Association – Li Yun-heng

Regulation should be tailored to the requirements of different industry players to avoid excessive burdens.

Chairman of the Bitcoin and Virtual Currency Development Association Lin Hung-yu

In response to the overseas platform advertising section in the guiding principles, he suggested that industry associations should be authorized to set standards, and some businesses proposed whether compliant domestic players and overseas platforms could jointly market to ensure accountability and consumer protection. Additionally, he proposed the establishment of a special agency, creating a Virtual Assets Bureau.

Legal Representatives: Call for Establishing Specialized Agencies, Special Law Regulation

Lawyers from Shih Hsin International Business Law Firm - Cao Wei-jie, and from Lee, Tsai & Partners - Xiong Quandi, highlighted the need for specialized agencies and special law regulation to address compliance burdens and the adequacy of existing regulations.

FSC Response: Certain Actions Cannot Be Taken, Binance Application Still Under Review

• Taiwan Cannot Issue Stablecoins: Due to concerns about affecting the supply of legal tender
• Foreign Players Cannot Advertise: Even if domestic players assist in foreign player advertising, considerations for consumer redress and accountability must be carefully evaluated.
• Binance's AML Declaration is still under review: Currently, 27 AML declarations have been received, of which 23 require additional information, 4 are still under review, and efforts will continue to review AML declarations and promptly announce the completion for new applicants.