Taiwan Advances Crypto Regulation as Bill Passes First Reading in Parliament
Taiwan's parliament, the Legislative Yuan, has passed the first reading of a proposed crypto law that would regulate the crypto asset industry.
Taiwan has taken a significant step in regulating the crypto sector by proposing a dedicated crypto law, which has been passed for the first time in the Legislative Yuan (Taiwan’s parliament). The proposed law, co-authored by Yung-Chang Chiang and 16 other lawmakers, would require all cryptocurrency platforms operating in Taiwan to obtain a license.
Failure to comply could result in regulatory orders for them to cease operations. While Taiwan’s Financial Supervisory Commission (FSC) has previously released guidelines for the crypto sector to establish self-regulatory rules, these measures lack legal enforcement.
The aim is to establish a regulatory framework that provides oversight and enforcement for crypto businesses, emphasizing the need for such legislation to ensure proper regulation of the cryptocurrency sector.
This follows when Yung-Chang Chiang, a member of Taiwan's Legislative Yuan, stated his intention earlier this month to have the first draft of the law ready for parliamentary review by the end of November 2023 or even sooner.
The new special law will empower the regulatory authority to impose administrative sanctions on operators who violate these self-regulatory rules. The law aims to address the need for law enforcement in the sector, as the existing self-regulatory guidelines did not have such powers.
Yung-Chang Chiang, a member of the Legislative Yuan who jointly proposed the special measures, said,
“We hope that the Financial Supervisory Commission can also submit their version of the draft law to the legislature, allowing various sectors of society to further consolidate consensus during the process.”
*Taiwan Proposes Crypto Law to Address Overseas Market Concerns, Boost Regulation*
Taiwan’s proposed crypto law comes in response to concerns over activity in overseas crypto markets and aims to prevent “regulatory arbitrage.” Lawmakers believe crypto assets are different from traditional financial products and require special regulation.
In addition to the proposed law, on September 26, Taiwan's Financial Supervisory Commission introduced guidelines to enhance investor protection in the cryptocurrency sector.
The guidelines cover various aspects of the industry, including separating exchange assets from customer assets, reviewing the listing and delisting of digital assets, and requiring foreign virtual asset service providers to obtain necessary approvals from local regulatory authorities.
On the same day, major cryptocurrency exchanges operating in Taiwan also formed an association to advance the interests of the industry.
However, it is not yet known exactly when the second reading of the bill will take place. However, it may not happen until January 2024, as the terms of all current lawmakers in Taiwan will end in January.
Currently, Taiwan requires virtual asset service providers to comply with anti-money laundering laws, but the crypto industry remains largely unregulated.
