Taiwan’s cryptocurrency sector is laying the foundations for an industry association ahead of the new guidelines set to be released by the island nation’s top financial watchdog later this week. Nine exchanges in Taiwan issued a joint statement on September 26, saying they’re planning to set up an industry association in mid-October. To expedite the process, they’ve also formed a working group.
The current working group comprises nine firms, including leading exchanges like MaiCoin, BitoGroup, and ACE. Winston Hsiao, co-founder and Group CRO of XREX, has been appointed as the convener of this group. However, once the industry association takes form, it will include a wide range of crypto firms, such as over-the-counter trading platforms, wealth investment platforms, custody service providers, and quantitative trading companies.
The announcement comes as Taiwan’s Financial Supervisory Commission for Virtual Currency Management gears up to release 10 guidelines for virtual asset providers. The proposed guidelines will ensure that crypto firms come up with review mechanisms, keep customers payments separate from their own tokens and comply with anti-money laundering laws (AML).
Under the new rules, unregistered overseas firms will reportedly be banned from operating in the country. This comes at a time when global exchanges like Binance are seeking registration in Taiwan for anti-money laundering (AML) compliance.
Last month, Taiwan government proposed a new business category in relevant regulations to enable crypto businesses to establish industry associations. The Ministry of Economic Affairs said it had drafted an amendment to the Standards of Classification of Commercial Group regulations, outlining the scope of operations within the cryptocurrency sector.
Notably, this includes activities like exchanging cryptocurrencies for legal tender or other digital tokens and facilitating the transfer of crypto assets. Additionally, it mentions providing services for storing crypto or management, and offering assistance related to the issuance or sale of crypto.
Government officials had then said that crypto firms will be able to form industry associations once the business category is added to the relevant regulations. Taiwan’s finance ministry has solicited public feedback and is likely to finalize the amendment with the Ministry of Interior by October.
Historically, Taiwan has taken a hands-off approach to crypto regulation only mandating virtual asset services providers (VASPs) to comply with anti-money laundering laws, a directive introduced by the FSC in July 2021. However, the fraud-fueled collapse of crypto exchange FTX has prompted a stricter regulatory regime, given the Taiwanese were one of the largest users of the exchange per capita.
Wayne Huang, the co-founder and Group CEO of Taipei-based crypto exchange XREX, welcomed the FSC’s upcoming guidelines, saying they could ““give birth to a new industry, providing this new industry legitimacy, oversight, a solid path to grow, and an accelerated means to acquire public trust.”
A number of Asian countries are working on their crypto regulations, and emerging as a strong competition to US and other global locations which have been nurturing crypto firms. In line with this, Hong Kong has announced it will come up with regulations for stablecoins by mid-2024.
