TBW 2024) Jiang Wan'an: Taipei will become an AI + blockchain smart city
The 2024 Taipei Blockchain Week (TBW 2024) grandly opened today (12/12), building a bridge between Taiwan's blockchain and the world from the first year's 'Bridge', to the second year's 'Scale' which became a large conference of 5,000 people, and this year's 'Onboard' focuses on the implementation of blockchain applications.
Regarding the annual Taiwan Blockchain Gala, Taipei Mayor Jiang Wan'an also took the stage to deliver a speech, emphasizing the Taipei City Government's supportive attitude toward emerging technologies.
Taipei City is actively promoting a five-year, 1 billion scale smart city innovation budget, encouraging city government agencies to adopt AI technology, promote cross-departmental cooperation, and create more smart city application cases.
Jiang Wan'an stated that Taipei's vision is to become a global leader in AI and blockchain technology. He hopes to provide a platform for young people to unleash their potential, accelerating Taiwan's transformation into an Asian innovation hub.
At the same time, the city government is committed to digital transformation, hoping to collaborate with industries to build Taipei into an open and innovative technology center.
Source: Crypto City Photography Taipei Blockchain Week 2024) Taipei Mayor Jiang Wan'an took the stage to discuss the AI + blockchain smart city vision
Cai Yuling elaborates on the panoramic view of Taiwan's virtual asset regulation
At the same event, Cai Yuling, honorary chairman of the Taiwan Fintech Association, provided a comprehensive analysis of Taiwan's regulatory blueprint for Virtual Asset Service Providers (VASPs). As an advisor to the preparatory group of Taiwan's virtual asset association, she elaborated on the latest developments and strategies in Taiwan's virtual asset regulation.
Cai Yuling pointed out that Taiwan has adopted a phased regulatory strategy aimed at protecting investors' rights while creating a favorable development environment for the virtual asset industry. This strategy can be summarized in the following key phases:
Phase One: Establishing Anti-Money Laundering (AML) Measures
In November this year, Taiwan officially passed amendments to the Anti-Money Laundering Act, incorporating VASPs and third-party payments into regulation, and listing detailed penalties, making the process clearer compared to the previous process based on compliance declarations under the Anti-Money Laundering Act.
Phase Two: Industry Collaboration and Self-Regulatory Norms
Cai Yuling emphasized that the key in the second phase is to gather industry participants to jointly develop self-regulatory norms. The Taiwan Virtual Currency Association plays a crucial role in this phase, organizing industry representatives to discuss and formulate industry standards together.
Taiwan's virtual asset self-regulatory norms were made public at the end of November, detailing regulations on investor protection, asset security, internal governance, and information transparency. For KOLs and the media, content regulations and risk disclosures have stricter requirements.
Cai Yuling stated that self-regulatory norms are not only regulatory language formulated by the industry but are also government-approved, thus alleviating concerns from the government.
Further reading:
Taiwan's virtual asset self-regulatory norms cheat sheet! Eight major impacts on operators and KOLs at a glance
Phase Three: The registration system for operators is in place
Taiwan's latest regulations require that Virtual Asset Service Providers (VASPs) must be formally registered when operating in Taiwan. Unregistered operators may face up to two years in prison and fines of 5 million TWD. The purpose of this phase is to ensure that all service providers are included in the regulatory framework, enhancing the overall transparency and reliability of the industry.
At the same time, Taiwan's Financial Supervisory Commission continues to conduct financial inspections of VASPs. This year, it has already penalized platforms such as MaiCoin, Bitstar, Rybit, and Ace Exchange (ACE), indicating that regulation is tightening.
Note: VASP includes exchanges, exchange platforms, custodians, asset transfer agents, and underwriters.
Further reading:
Do not test the law with your body! Taiwan's VASP registration system is in place, unregistered virtual asset services face a maximum penalty of 2 years
Phase Four: Establishing a Basic Regulatory Framework
In this phase, the Financial Supervisory Commission of Taiwan began drafting regulations related to virtual assets to lay the foundation for future comprehensive regulation, focusing on establishing basic compliance requirements and regulatory principles.
(Crypto City) Previously reported that the chairman of the Financial Supervisory Commission, Peng Jinlong, revealed that the specialized law for virtual asset management is expected to be submitted to the Executive Yuan in June 2025 to begin the legislative process.
What are the guiding principles for Virtual Asset Service Providers (VASPs)?
Cai Yuling detailed the specific requirements for VASPs. First, all VASPs must join the Taiwan Virtual Currency Association, which helps establish industry self-regulatory rules and create a comprehensive information security management system to protect customer data and asset security.
VASPs must also set up trust accounts to ensure the secure separation of customer funds and establish detailed customer protection policies, including complaint handling mechanisms and asset tracking procedures, while implementing strict Know Your Customer (KYC) processes to prevent money laundering and illegal transactions.
Taiwan's virtual asset custody business will begin trial implementation next year
In addition to regulatory norms, Cai Yuling also mentioned that from January to April 2025, the Financial Supervisory Commission will begin trial implementation of 'virtual asset custody business', with custodians not limited to VASPs; financial institutions (fintech companies) can also apply for registration, and she highlighted some regulatory focal points:
Custodians need to register differentially based on the level of asset control.
A comprehensive asset reconciliation mechanism must be established
A clear customer asset protection policy needs to be established
Source: Crypto City Photography Taipei Blockchain Week 2024) Cai Yuling took the stage to detail Taiwan's trial plan for virtual asset custody business
As cryptocurrency fraud becomes increasingly rampant, how is Taiwan preventing it?
The problem of internet financial fraud in Taiwan is becoming increasingly severe, causing headaches for both the public and government. Data shows that among the 37,823 fraud cases in 2023, 30% were related to cryptocurrency fraud, with financial losses amounting to 5.3 billion TWD.
To combat fraud, Cai Yuling pointed out that Taiwan has established a multi-layered protective mechanism:
Suspicious account monitoring: including establishing a cross-platform suspicious account reporting mechanism for quick freezing and tracking of suspicious transactions.
Asset tracking: Establishing an asset transfer reporting system, collaborating across platforms to track abnormal transactions.
Investor protection: In specific situations, platforms may be required to refund stolen assets and establish a mechanism for investor complaints and restitution.
Source: Crypto City Photography Taipei Blockchain Week 2024) Cai Yuling took the stage to detail the current state of crypto regulation in Taiwan
The future of Taiwan's virtual asset regulation
Cai Yuling holds an optimistic view of the future of Taiwan's virtual asset industry. She emphasized that the current regulatory framework is an evolving process, with the government and industry continuing to cooperate to refine the regulatory system.
Taiwan is attempting to find a balance between risk management and industrial innovation, striving to establish a regulatory environment that protects investors while encouraging technological innovation.
Through a phased and collaborative regulatory approach, Taiwan hopes to set a benchmark in the global virtual asset regulatory field, demonstrating a regulatory wisdom that combines openness and prudence.
'TBW) Calling out blockchain! Jiang Wan'an reveals Taipei's smart city vision, what’s the progress on crypto regulation?' This article was first published in 'Crypto City'