Taiwan has initiated the process of regulating digital assets by presenting a crypto bill for its initial review in the Legislative Yuan.
The proposed legislation, known as the Virtual Asset Management Ordinance Draft bill, aims to accomplish several objectives. These include providing clear definitions for virtual assets, establishing operational standards for asset operators, ensuring the protection of customers, and making membership in industry associations and regulatory permissions mandatory.
Up until now, Taiwan has largely adopted a hands-off approach to the digital asset sector, primarily regulating it within the boundaries of existing anti-money laundering and know-your-customer laws. However, this regulatory landscape underwent a transformation following the collapse of the FTX cryptocurrency exchange in November. FTX had gained popularity in Taiwan due to its attractive U.S. dollar interest rates compared to local banks, prompting regulators to expedite the introduction of comprehensive regulations.
Unlike crypto regulations in neighboring Hong Kong, Taiwan’s bill does not take a strong stance on derivatives or stablecoins. Nevertheless, it does acknowledge the distinctive characteristics of derivatives linked to virtual assets, particularly perpetual contracts, which may not align entirely with traditional financial regulations. This acknowledgment suggests the possibility of introducing specific regulations for crypto derivatives in a later version of the bill.
Also, unlike Japan, which mandates the use of custodians for exchanges with local licenses, Taiwan’s draft bill requires a clear separation of customer assets from business funds but does not explicitly specify the utilization of third-party custodians. Instead, operators of exchanges are mandated to regularly commission reports from accountants regarding their operations and asset management. The bill also grants regulators, such as the Financial Supervisory Commission (FSC), the authority to inspect the internal control and audit systems of exchanges on a periodic basis.
While this version of the bill does not explicitly mention Proof of Reserves, it does empower the regulator to establish asset ratio standards in consultation with the industry, with the expectation that licensed exchanges will adhere to these standards.
Stakeholders in Taiwan’s crypto industry have expressed their willingness to embrace formal regulatory oversight and are eager to collaborate with the FSC in defining and implementing regulatory procedures.
Wayne Huang, co-founder and CEO of the Taipei-based fintech company XREX, has previously highlighted the industry’s commitment to working with regulators to establish effective regulatory frameworks.
As the global landscape evolves, it becomes increasingly evident that blockchain and cryptocurrencies are at the forefront of this transformation. Taiwan’s move to regulate digital assets is just one example of the many steps taken worldwide to harness the potential of this technology.
With innovative applications, enhanced security, and the promise of financial inclusion, blockchain and crypto are undoubtedly the future, with nations and industries around the world striving to stay ahead in this exciting journey of transformation and growth.
The post <a rel="noopener noreferrer nofollow" href="https://www.unlock-bc.com/111058/taiwan-takes-the-first-step-in-digital-asset-regulation-with-introduction-of-crypto-bill/">Taiwan Takes the First Step in Digital Asset Regulation with Introduction of Crypto Bill</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://www.unlock-bc.com">UNLOCK Blockchain</a>.

Taiwan Takes the First Step in Digital Asset Regulation with Introduction of Crypto Bill

UNLOCK_ENG

Other articles published on Oct 27, 2023

Join our free newsletter for daily crypto updates!