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Taiwan has announced its plans to regulate its crypto industry through the Financial Supervision and Administration Committee (FSC) or the newly established Ministry of Digital Affairs (MODA).
Taiwan’s Crypto Legislation
Taiwan plans to regulate cryptocurrencies through special legislation, and its Financial Supervisory Commission (FSC) will monitor the burgeoning industry. Huang Tien-mu, the Chairman of the FSC, confirmed this during a parliament hearing analyzing global banking stability.
Participants in Taiwan’s crypto industry welcomed the news. Wayne Huang, the co-founder and CEO of XREX, believes the industry will grow under proper regulation.
Finally! Taiwanese regulators will fully regulate the crypto industry. Excellent coverage by @CoinDesk @thesamreynolds 🙏🏽https://t.co/5PvgCCgQDS
— Wayne Huang (@waynehuang) March 20, 2023
The new rules will require crypto trading platforms to be licensed by the appropriate regulators. Meanwhile, consultations have been launched to propose how best to regulate virtual asset trading platforms. An initial framework for the law is expected by June, with an initial draft for later this year.
Taiwan’s central bank and the FSC are two of the primary financial regulators in Taiwan. The central bank sets the country’s monetary policy and oversees foreign exchange regulations. On the other hand, the FSC has a broad remit over everything from banking regulation, securities, and Futures to anti-money laundering (AML).
Some lawmakers in Taiwan wanted the newly-established Ministry of Digital Affairs (MODA) to be the chief crypto regulator since it is a new digital asset technology. Yet, others said the MODA is relatively new and inexperienced compared to the FSC.
Currently, the FSC has no interest in regulating non-fungible tokens (NFTs) and local Taiwan media quoted Huang Tien-mu, saying that since NFTs are still emerging as an asset class, it is too early to regulate them.
FTX Crash Shaping Taiwan’s Crypto Landscape
Despite China’s ban on crypto-related activities, Hong Kong wants to become a crypto hub. Taiwan, which has previously taken a hands-off approach to crypto regulation, is following Hong Kong’s lead.
The FTX crash of last year could have made regulators speed up the creation of applicable laws. Following the bankruptcy of the Sam Bankman-Fried-led exchange, clients in Taiwan were some of the most impacted, with a report estimating that they lost approximately $20 billion.
The FTX collapse also saw crypto assets tank. Bitcoin dropped below $20,000 in mid-November, registering new 2022 lows.
Crypto firms in Taiwan remain optimistic that the government will learn from Hong Kong’s regulatory experience and take steps to create a favorable regulatory environment to spur innovation in crypto and blockchain.
Despite Hong Kong’s crypto ambitions, the city could still find competition with other hubs like Singapore and Dubai.
According to Yuya Hasegawa, a market analyst from the Japanese crypto exchange Bitbank, regulation is necessary for healthy growth. Still, to compete with other crypto hubs, there must be an appealing tax policy for crypto projects.
