During the questioning in the Legislative Yuan on December 19, Kuomintang legislator Lai Shibao raised multiple questions to FSC chairman Peng Jinlong regarding the phenomenon of stock market crashes following the U.S. announcement of interest rate cuts. The discussion covered global stock market dynamics, the appeal of the cryptocurrency market for capital, and Taiwan's regulatory policies on decentralized finance (DeFi) and virtual assets.
Legislator Lai Shibao questioned the phenomenon of cryptocurrency operators receiving USDT and offering interest rate products, referring to it as 'suspected fundraising.' Chairman Peng Jinlong responded that they will include debt-related financial products in next year's discussions on special legislation and consider regulating DeFi, which sparked a discussion.
Interest rate cuts failed to boost the stock market, legislators are puzzled.
Lai Shibao pointed out that according to general economic logic, a U.S. interest rate cut should be a positive signal for the stock market, but instead, it led to a crash of over a thousand points. He hoped that Peng Jinlong could analyze the main reasons professionally. Peng Jinlong stated that the market's expectations for the speed of interest rate cuts were disappointed, combined with uncertain international political factors, the end-of-year vacation effect of investors, and the impact of U.S. inflation and tariff policies, all of which could lead to severe fluctuations in the stock market. He further mentioned that the low expectations for future interest rates in the 'dot plot' are also one of the reasons for the market's lukewarm response.
Are funds flowing into cryptocurrencies?
During the questioning process, Lai Shibao mentioned that some viewpoints suggest that funds are flowing from traditional markets to the cryptocurrency market, which may be one reason for the decrease in stock market funds. He noted the recent surging price of Bitcoin, which has attracted capital market attention. Peng Jinlong responded that although the trading volume of cryptocurrencies is still relatively low compared to traditional financial markets, the growth rate is astonishing, and Taiwan has also observed a gradual increase in the attractiveness of virtual assets.
DeFi products challenge regulation: Are they suspected of fundraising?
Lai Shibao specifically pointed out that the exchange platform Bito is using stablecoins (such as USDT) as a basis to offer a fixed short-term interest rate of up to 4.5% to 5.5%, claiming it to be 'capital-preserving and guaranteed profit.' He believes that such products are reminiscent of past fundraising events and questions whether the Financial Supervisory Commission (FSC) has regulatory responsibility for this.
Peng Jinlong responded: 'This is what we call the DeFi part.' DeFi-related transactions are currently within the regulatory scope of the FSC, but specific regulations are still being drafted. He revealed that the FSC will hold a public hearing on the special law for virtual asset management in January 2025 and submit it to the Executive Yuan for review in June.
Cryptocurrency financial products are unfair to compliant third-party payment providers.
Lai Shibao stated: 'We need to set some rules. For third-party payments, for example, if I buy something on a certain platform, and I put ten thousand there, I use two thousand to buy something, leaving eight thousand. If they take the eight thousand to invest and give me a fixed interest rate of 4%, is that okay? You say it’s not allowed, but in the past you said it’s not allowed, but Bito can do it; this is very strange.'
Peng Jinlong responded: 'I didn't say it was possible.' He stated that this is something that is evolving worldwide, and the future special law will be included in discussions.
Special law for virtual assets: clearly regulates market behavior.
Regarding the future direction of cryptocurrency regulation, Peng Jinlong stated that the special law for virtual assets will cover various aspects, including transaction regulations, institutional management, and consumer protection, and is committed to ensuring investor rights. He emphasized that legal trading activities must comply with regulations, and the goal of the special law is to allow emerging financial technology to develop on a legal and compliant basis.
Lai Shibao emphasized at the end that the public has high expectations for the FSC, believing that the FSC should take responsibility for any areas involving financial transactions. Peng Jinlong responded that not all financial transactions fall under the FSC’s jurisdiction, but they will strengthen cooperation with other departments to ensure stable market operations.
This article discusses whether cryptocurrency financial products are suspected of fundraising? Legislators believe it is unfair to third-party payments, and the FSC: discussions on regulating DeFi and financial products will be held next year, first appearing in Chain News ABMedia.
