Taiwanese legislators presented the Virtual Asset Management Bill to the Legislative Yuan on October 25. The bill’s primary objective is to enhance customer protection and establish effective supervision within the crypto industry.
Outlined in the 30-page bill are sensible obligations for Virtual Asset Service Providers (VASPs). These include the segregation of customer funds from the company’s reserves, implementation of internal control and audit systems, and membership in the local trade association. Notably absent are specific provisions mandating stablecoin issuers to maintain a 1:1 reserve fund ratio, and there is no mention of algorithmic stablecoins. Additionally, rules concerning advertising activities will be determined by the relevant authority.
Taiwan Imposes Penalties for Unlicensed Operations
The bill proposes hefty fines for unlicensed VASPs, ranging from a minimum of 2 million Taiwanese dollars (approximately $60,000) to a maximum of 20 million TWD ($600,000). Existing companies operating in the Taiwanese market will have a six-month window to obtain a license once the bill becomes effective.
This development follows the country’s Financial Supervisory Commission (FSC) releasing industry guidelines for VASPs in September 2023. The FSC has strictly prohibited foreign VASPs from offering services in the country without obtaining regulatory approvals.
In response, major cryptocurrency exchanges in Taiwan have taken proactive steps towards self-regulation. On September 26, local exchanges, including MaiCoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito, collaborated to establish the Taiwan Virtual Asset Platform and Transaction Business Association. Their collaborative efforts aim to support the crypto industry while fostering a constructive relationship with regulators.