In a bid to address<a href="https://medium.com/&#64;coinness.gl/taiwan-to-restrict-offshore-non-complaint-exchanges-676267fc741d" rel="noopener noreferrer nofollow"> growing concerns</a> surrounding offshore crypto exchanges and prevent regulatory arbitrage, Taiwan is actively working towards proposing a draft special crypto law for its first reading by the end of November.Yung-Chang Chiang, a member of the Legislative Yuan, the Taiwanese parliament, emphasized the need for a dedicated crypto asset act to effectively regulate crypto businesses in<a href="https://www.theblock.co/post/255132/taiwan-hopes-to-propose-special-crypto-law-by-end-of-november-lawmaker" rel="noopener noreferrer nofollow"> discussion</a> with The Block on Friday. Chiang believes that cryptocurrencies, as an asset class, significantly differ from traditional financial products and require oversight through a separate, specialized legal framework.<h2 id="header-0">Public hearing</h2>The Taiwanese politician recently organized a public hearing within the parliament to discuss the draft proposal with key stakeholders, including virtual asset service providers, legal experts, and academics. He argued that while Taiwan’s Financial Supervisory Commission (FSC) had released<a href="https://coinmarketcap.com/community/articles/64e0aba231c2b963ae6f3502/" rel="noopener noreferrer nofollow"> guidelines</a> for the crypto sector to establish self-supervisory rules through a potential industry association, these measures lack legal enforceability.Chiang pointed out:“In this case, under the authority of this special law, regulatory authorities can impose administrative penalties on operators who violate these self-regulation rules. Without such a special law, the regulators would lack the ability to impose penalties.”Under the proposed special law, all crypto platforms operating in Taiwan would be required to obtain a permit. Failure to do so could result in regulatory orders to cease operations. Presently, Taiwan mandates that virtual asset service providers comply with anti-money laundering (AML) laws, which were introduced by the FSC in July 2021. However, the broader crypto industry in Taiwan remains largely unregulated.It is unlikely that the special law will pass through all three readings during the current legislative session, which is expected to conclude by the end of this year. Chiang noted: “An election is coming up, and the current legislative session focuses more on reviewing the government’s budget.”Chiang also mentioned the possibility of Taiwan’s FSC proposing its version of the special crypto law, but this is not anticipated until at least mid-2024. He explained: “It’s hard to say exactly when the special law will be enacted, but it should likely occur sometime after the middle of 2024.”Binance, the world’s largest crypto exchange, is understood to be in the<a href="https://medium.com/&#64;coinness.gl/binance-initiates-registration-process-for-aml-compliance-in-taiwan-731bca121942" rel="noopener noreferrer nofollow"> process</a> of registering in Taiwan for AML compliance, despite not currently being regulated in the country. The exchange has formed a local entity named “Binance International Limited Taiwan Branch (Seychelles),” as indicated in the Taiwanese Ministry of Economic Affairs’ database.<h2 id="header-1">Banking difficulties</h2>During the public hearing, Damien Ho, Representative of Global Partnerships at Binance, raised concerns about the challenges faced by crypto platforms in Taiwan in securing suitable banking services. Despite the FSC’s efforts to discourage banks from treating crypto platforms as high-risk entities, crypto platforms still encounter difficulties in their interactions with banks. Ho suggested that the Taiwanese government should encourage private or public banks to become more crypto-friendly, facilitating the regulated and effective development of crypto businesses.At the public hearing, Winston Hsiao, Co-Founder and Group CRO of Taipei-based crypto exchange XREX, suggested a step-by-step approach to regulation, with smaller entities adhering to self-supervisory rules formulated by the industry association after registration. For larger entities, he proposed obtaining a permit under the special law and potentially applying for other relevant financial licenses.

Taiwan Aims to Propose Special Crypto Law by Late November

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