Crypto News– On October 25, lawmakers in Taiwan introduced the Virtual Asset Management Bill to the Legislative Yuan, the country’s unicameral parliament. This bill is designed to provide increased customer protection and proper oversight for the rapidly growing cryptocurrency industry. Spanning 30 pages, the legislation takes a balanced approach, seeking to define virtual assets, establish operational guidelines for asset providers, bolster consumer protections, and mandate involvement in industry associations and regulatory approvals.
Taiwan Takes Formal Steps Toward Enacting Crypto Legislation
Taiwan had previously maintained a laissez-faire approach to the cryptocurrency sector, subjecting it to existing know-your-customer and anti-money laundering regulations. However, the pace of regulatory efforts accelerated following the collapse of the popular cryptocurrency exchange FTX in November of the previous year.
FTX had garnered substantial popularity among Taiwanese users, largely attributed to its favorable U.S. dollar interest rates in comparison to local banks.
Requirements for Operations and Associated Penalties
The newly introduced bill differs from cryptocurrency regulations in neighboring Hong Kong, as it does not firmly address derivatives or stablecoins. While it acknowledges that derivatives tied to virtual assets, such as perpetual contracts, possess unique characteristics that don’t necessarily align with traditional financial regulations, it leaves the door open for potential future regulations specific to crypto derivatives.
In contrast to Japan, where the use of custodians is mandatory for locally licensed exchanges, the Taiwanese bill only necessitates the separation of customer assets from business funds. It does not explicitly require the involvement of third-party custodians.
The legislation also stipulates that exchange operators must engage accountants to produce periodic reports and allow regulatory authorities like the Financial Supervisory Commission (FSC) to conduct regular inspections of their internal control and audit systems.
Interestingly, the bill does not mandate stablecoin issuers to maintain a 1:1 reserve fund ratio, and it does not make specific references to algorithmic stablecoins. The competent authority has yet to establish rules regarding the advertising of virtual assets.
%s Comment