The 2024 Taipei Blockchain Week (TBW 2024) grandly opened today (12/12), connecting Taiwan's blockchain to the world from the first session 'Bridge', to the second session 'Scale' becoming a 5,000-person scale conference, and this year's 'Onboard' focuses on the practical application of blockchain. Regarding the annual Taiwan blockchain event, Taipei Mayor Jiang Wan'an also delivered a speech emphasizing the city government's supportive attitude towards emerging technologies.
Taipei Mayor Jiang Wan'an discusses the technology vision
Taipei City is actively promoting a five-year, 1 billion scale smart city innovation budget to encourage city government agencies to adopt AI technology, promote cross-departmental collaboration, 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. Meanwhile, the city government is committed to digital transformation and aims to collaborate with the industry to build Taipei into an open and innovative technology center.
Cai Yuling, Chairman of the Fintech Association, details the regulatory landscape in Taiwan
At the same event, Cai Yuling, honorary chairman of the Taiwan Fintech Association, provided a comprehensive analysis of the regulatory blueprint for virtual asset service providers (VASPs) in Taiwan. As an advisor to the preparatory committee 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 investor rights while creating a favorable development environment for the virtual asset industry. This strategy can be summarized into several key stages:
Stage One: Establishing Anti-Money Laundering (AML) Measures
In November of this year, Taiwan officially passed amendments to the Anti-Money Laundering Act, incorporating VASPs and third-party payments into the regulatory framework, with detailed penalties outlined, making the process clearer compared to the previous anti-money laundering compliance declaration.
Stage Two: Industry Collaboration and Self-Regulation
Cai Yuling emphasized that the key to Stage Two is to gather industry participants to jointly formulate self-regulatory norms. The Taiwan Virtual Currency Association plays a crucial role in this stage, organizing industry representatives to discuss and formulate industry standards.
Taiwan's self-regulatory framework for virtual assets was publicly released at the end of November, with detailed regulations regarding investor protection, asset security, internal governance, and information transparency. There are also stricter requirements for content regulation and risk disclosure for KOLs and media. Cai Yuling stated that the self-regulatory framework is not only a regulatory language formulated by the industry, but since it has been approved by the government, it can alleviate concerns from the government.
Stage Three: Implementation of Operator Registration System
Taiwan's latest regulations require that virtual asset service providers (VASPs) must officially register to operate in Taiwan. Unregistered operators may face a maximum two-year prison term and a fine of 5 million. The aim 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 FSC continues its financial inspections on VASPs, having already penalized platforms such as MaiCoin, BitoEX, Rybit, and ACE, indicating a tightening of regulation.
Note: VASPs include exchanges, exchange platforms, custodians, asset transfer agents, and underwriters.
Stage Four: Establishing a Basic Regulatory Framework
At this stage, the Taiwan FSC began drafting regulations related to virtual assets, laying the foundation for future comprehensive regulation, with a focus on establishing basic compliance requirements and regulatory principles.
(Crypto City) Previously reported that Financial Supervisory Commission (FSC) Chairman Peng Jinlong revealed that a special law for virtual asset management is expected to be sent 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, stating that all VASPs must join the Taiwan Virtual Currency Association, which helps establish industry self-regulatory rules and build a comprehensive information security management system to protect customer data and asset security.
VASPs must also set up trust accounts to ensure the safe segregation of client funds and develop detailed customer protection policies, including complaint handling mechanisms and asset tracking procedures, as well as implementing strict Know Your Customer (KYC) processes to prevent money laundering and illegal transactions.
Taiwan's virtual asset custody business will begin trial operations next year
In addition to regulatory norms, Cai Yuling also mentioned that from January to April 2025, the FSC will begin trial operations for 'virtual asset custody services,' which will not be limited to VASPs; financial institutions (fintech companies) can also apply for registration, with some regulatory focuses mentioned:
Custody service providers need to differentiate their registration based on the level of asset control
A comprehensive asset reconciliation mechanism must be established
Clear customer asset protection policies need to be formulated
Cai Yuling: Remains optimistic about Taiwan's regulation, gradually improving
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, and the government and industry will continue to collaborate to continuously improve the regulatory system. Taiwan is trying to find a balance between risk management and industry 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 global virtual asset regulation, demonstrating both openness and prudence.
(This article is authorized for reprint from Crypto City)
This article TBW 2024｜Taipei Mayor Jiang Wan'an discusses the city's vision: to become a global leader in AI and blockchain technology, originally appeared in Chain News ABMedia.