Taiwan’s legislative push for comprehensive digital currency regulation is gaining momentum, with Yung-Chang Chiang, a member of the Legislative Yuan, expressing his intention to introduce a crypto-specific law for initial reading by November’s end or even sooner.
The Need for Cryptocurrency-Specific Regulation
In an interview, Chiang underscored the necessity of a dedicated digital asset act to regulate digital currency firms effectively. He pointed out that digital currencies fundamentally differ from traditional financial instruments, warranting a distinct regulatory framework.
Chiang called for a public hearing at the parliament to discuss the draft proposal. The participants included virtual asset service providers, legal experts, and academics.
Although the Financial Supervisory Commission (FSC) had already provided guidelines for the crypto sector to implement self-regulatory measures, Chiang argued that these guidelines lacked legal enforcement, thereby necessitating a dedicated law. This proposed law would grant regulatory authorities the power to impose administrative penalties on operators who fail to comply.
Chiang has proposed a legislation that requires all crypto platforms operating in Taiwan to obtain a permit. Failure to comply may result in regulators instructing them to cease operations.
While anti-money laundering laws already apply to virtual asset service providers in Taiwan, Chiang emphasized that many platforms have yet to declare their compliance with the FSC due to the lack of a specific legal framework.
However, Chiang acknowledged that passing the special law through three readings during the current legislative session, set to conclude by year-end, might be unlikely due to competing priorities. He also suggested that the FSC might propose its version of the special crypto law in mid-2024 or later.
During the public hearing, Damien Ho, a representative of global partnerships at Binance, highlighted the difficulties platforms faced in securing suitable banking services. He urged the Taiwan government to incentivize banks to become more crypto-friendly, fostering a regulated and efficient crypto business environment. Binance, while not regulated in Taiwan, recently initiated the registration process for AML compliance.
Winston Hsiao, co-founder and Group CRO of Taipei-based crypto exchange XREX, stressed the importance of compliance in the crypto industry but proposed a tiered approach. Small-scale entities could adhere to self-supervisory rules, while larger ones should obtain permits under special law and possibly seek other relevant financial licenses.
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