A new bill named the “Virtual Asset Management Regulations Draft,” which attempts to establish a thorough regulatory framework for the cryptocurrency business, has been introduced in Taiwan, marking a significant step toward the regulation of its burgeoning virtual asset market.
The action is being taken as Taiwan struggles with the nation’s exponential increase in virtual assets.
The main objective of the bill is to create regulations for virtual asset service providers that provide investor protection and prompt identification and resolution of any threats to the stability of the financial system.
As of right now, the only rules that virtual asset service providers in Taiwan have to follow are those related to anti-money laundering, which were established by the Financial Supervisory Commission (FSC) in July 2021.
Opponents contend that the FSC needs to revise its regulations since they have not kept up with the industry’s expansion. Although providers of virtual assets have multiplied and expanded the range of services they offer, the FSC mainly concentrates on anti-money laundering compliance.
Lawmakers contend that the nation needs a thorough regulatory framework to support the rapidly expanding bitcoin business because the whole cryptocurrency sector is still mainly uncontrolled.
According to the “Taiwan Blockchain Industry Map/Key Report,” there were 200 domestic blockchain companies operating in the nation as of August.
According to the proposed legislation, cryptocurrency platforms operating in Taiwan will need to obtain a permit in order to operate within the nation. Failure to comply with this requirement may result in regulatory action, which may include a possible suspension of operations.
The exact date of the bill’s second reading is yet unknown, but observers speculate that it might go beyond January 2024—the end of the current legislators’ term in Taiwan.
Taiwan’s “Virtual Asset Management Regulations Draft” offers the following provisions to maintain market order, improve regulation, and protect investor rights:
- Classifying operators and defining the scope of virtual assets.
- Requirements for industry associations, permission processes, and leadership positions.
- obligating membership in specific trade associations.
- regulations on the issuance of virtual assets and derivatives.
- Records of customer asset retention and separation.
- Disclosures about customer data protection and custody policies.
- Regulations governing public virtual asset trading and safeguards for consumers.
- open marketing and advertising strategies.
- Standards for information security and reporting of incidents.
- standards for internal controls, audits, compliance, and risk management.
- Capital enforcement and rules for financial reporting.
- Penalties for noncompliance with regulations.
- Procedures for resolving customer disputes and payment.
- uniform upkeep of information systems.
This historic law intends to attract investment, stabilize Taiwan’s virtual asset market, and sensible expansion of the sector.
The government’s proactive approach highlights its commitment to promoting a well-regulated virtual asset ecosystem, even when execution presents problems.