Taiwan’s FSC Issues Comprehensive Guidelines for Crypto Industry: Focus on Customer Protection and Compliance

The Financial Supervisory Commission (FSC) of Taiwan has introduced comprehensive guidelines for virtual asset service providers (VASPs) with a strong emphasis on enhancing customer protection and regulatory compliance in the cryptocurrency industry. This move signifies a significant step toward legitimizing the cryptocurrency sector in Taiwan.

Key Points:

1. Customer Asset Protection: The guidelines mandate domestic cryptocurrency platforms to implement strict measures to ensure the separation and secure custody of both company and customer assets.
2. Asset Listing Standards: VASPs are required to establish clear review standards for the listing and delisting of virtual assets, ensuring transparency and consumer confidence.
3. Registration for Offshore Exchanges: Offshore cryptocurrency exchanges seeking to operate within Taiwan’s jurisdiction must register with the Financial Supervisory Commission. They are also required to declare compliance with anti-money laundering (AML) regulations.
4. Limitations on Operations: Cryptocurrency platforms are not allowed to engage in operations involving derivative financial product transactions with virtual assets as underlying assets or virtual asset businesses with securities-like characteristics. This restriction aims to maintain financial market stability.
5. Industry Association Formation: Cryptocurrency platforms in Taiwan are expected to create an industry association to develop self-supervisory rules based on the FSC’s guidelines. Nine prominent Taiwanese cryptocurrency exchanges have formed a working group for this purpose.

Industry’s Response: The working group comprises nine leading firms within Taiwan’s cryptocurrency ecosystem, demonstrating the industry’s commitment to self-regulation and compliance. The industry association is expected to be established with the goal of submitting an application by mid-October.

Impact on the Cryptocurrency Industry in Taiwan: These guidelines position Taiwan as a regional leader in cryptocurrency regulation and consumer protection. Taiwan’s proactive regulatory stance aims to strike a balance between innovation and safeguarding the interests of investors and consumers in the rapidly evolving cryptocurrency landscape.

By enforcing stringent rules and fostering industry collaboration through self-regulation, the Taiwanese government aims to create a secure and transparent environment for digital asset transactions. This approach is expected to enhance the credibility and accountability of cryptocurrency platforms operating within Taiwan’s borders and foster the growth of the cryptocurrency industry in the country.

As cryptocurrencies continue to gain mainstream acceptance worldwide, Taiwan’s regulatory efforts serve as an example of how governments can promote a secure environment for digital asset transactions while nurturing the growth of this emerging industry.