Taiwan Plans Phased Approach To Cryptocurrency Regulation

The Taiwan government is set to establish a new era of supervision over virtual assets (commonly known as virtual currencies), with the Financial Supervisory Commission (FSC) expected to take on the lead role. The announcement is expected by the end of March this year, with the aim of preventing a similar situation to the bankruptcy of FTX, the world’s second-largest cryptocurrency trading platform.

Virtual Asset Supervision

Taiwan will follow the lead of countries such as the European Union, Singapore, Japan, South Korea, and Israel, where financial supervisory agencies play the role of virtual asset supervision. The FSC is expected to manage virtual assets and supervise the order of trading platforms after coordination between ministries and councils.

The current trend is to adopt phased supervision intensity. The industry will be given the chance to self-discipline and regulate first, with the FSC continuing to collect international trends, study future regulatory trends, and finally establish a special law for the direction of virtual asset supervision.

The officials plan to first formulate principled guidelines before the industry association develops self-regulatory norms, including the establishment of rules for asset isolation, wallet management, commodity listing and removal, among others.


Balancing Competing Ministry Interests

However, there are still difficulties in determining the competent authority for virtual assets as they are diverse. For example, non-fungible tokens (NFTs) are difficult to be determined by the FSC and it is not easy to be handed over to a single ministry for processing. The nature of virtual asset business does not involve only a single ministry, such as investment and payment, which are more biased towards the FSC, but stablecoins involving the exchange of fiat currency may also involve the rights and responsibilities of the central bank, and blockchain, NFT, etc. are more biased towards the digital ministry or other ministries.

The use of NFT as an electronic signature certificate is set to be managed by the digital department, and other NFT applications need further discussion. Once the relevant plans and practices are submitted to the Executive Yuan, they will be announced to the public at the end of March and April at the earliest, with the FSC issuing a press statement at the same time.