Taiwan parliament, the Legislative Yuan, has passed the first reading of a proposed crypto law that would regulate the crypto asset industry. This significant step towards regulating the crypto sector aims to establish a regulatory framework that provides oversight and legal enforceability for crypto businesses.
Special Crypto Law Proposed
The proposed crypto law, co-authored by Yung-Chang Chiang and 16 other lawmakers, would require all cryptocurrency platforms operating in Taiwan to obtain a permit. Failure to comply could lead to regulatory orders for them to cease operations. This move highlights the necessity of such a law to ensure proper regulation in the cryptocurrency sector.
“The goal is to establish a regulatory framework that provides oversight and legal enforceability for crypto businesses.” – Yung-Chang Chiang
Taiwan’s Financial Supervisory Commission (FSC) had previously released guidelines for the crypto sector to form self-supervisory rules. However, these measures lacked legal enforceability, signaling the need for a more comprehensive regulatory approach.
Regulating Offshore Crypto Markets
The proposed crypto act in Taiwan aims to address concerns over activity in offshore crypto markets and prevent “regulatory arbitrage.” Lawmakers recognize that crypto assets are distinct from traditional financial products and warrant special regulations.
“Crypto assets are distinct from traditional financial products and warrant special regulations.” – Yung-Chang Chiang
In addition to the proposed law, Taiwan’s Financial Supervisory Commission introduced guidelines in September to enhance investor protections in the cryptocurrency space. These guidelines cover various aspects of the industry, including separating exchange assets from customer assets and reviewing the listing and delisting of digital assets.
To further advance the interests of the industry, major cryptocurrency exchanges operating in Taiwan have formed an association.
While the exact timeline for the second reading of the bill is not specified, it may occur in January 2024, as the tenure of lawmakers in Taiwan ends next January. Currently, Taiwan requires virtual asset service providers to comply with anti-money laundering laws, but the crypto industry remains largely unregulated.
