Several countries worldwide are currently taking major steps to regulate cryptocurrencies in order to protect investors. In the UK, over 200 crypto firms have been observed violating rules, potentially causing significant losses for investors.
Taiwan’s virtual asset management bill
On October 25, 2023, Taiwan’s regulatory body introduced the Virtual Asset Management Bill to the parliament. The main objective of this bill is to provide customer protection and attract more crypto firms to the country, especially as several firms in the United States are facing ongoing challenges.
The regulation bill places a strong focus on practical requirements for virtual asset service providers (VASPs). These requirements include segregating customer funds from a company’s reserve funds, establishing internal controls and audit systems, and encouraging membership in local trade associations.
Notably, the bill does not currently require stablecoin issuers to maintain a 1:1 reserve fund ratio and does not address algorithmic stablecoins. Marketing rules, including advertising guidelines, will be determined by the “competent authority” at a later stage.
Fines for unlicensed Crypto firms
The bill primarily focuses on VASP companies. Any firm found providing services in the country without a license will be subject to a fine ranging from a minimum of $2 million Taiwanese dollars, equivalent to $60,000 USD, to a maximum of 20 million TWD, equivalent to $600,000 USD. Existing companies must secure this license within six months of the bill’s implementation.
Furthermore, the Financial Supervisory Commission (FSC) of Taiwan had already issued industry policies for VASPs in September 2023. Among the guidelines is a requirement for foreign VASPs to obtain regulatory approval before offering services in Taiwan.
Collaborative efforts with local exchanges
These regulatory efforts are in response to proactive actions by major cryptocurrency exchanges in Taiwan. On September 26, several local cryptocurrency exchanges, including MaiCoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito, established the Taiwan Virtual Asset Platform and Transaction Business Association.
Their aim is to support the cryptocurrency industry and collaborate with regulators to promote responsible growth.
As Taiwan takes steps to introduce these crypto regulations and guidelines, it is striving to create a balanced environment that encourages innovation while safeguarding the interests of cryptocurrency enthusiasts and investors in the country. Countries like South Korea, Hong Kong, the UK, and many others have already passed cryptocurrency regulation bills with a primary focus on investor protection.