Taiwan’s financial regulator, the Financial Supervisory Commission (FSC), is tightening its grip on the cryptocurrency industry. New regulations, set to take effect in January 2025, will require crypto asset service providers (VASPs) to register and adhere to stringent standards for listing, trading, and custody of digital assets.
Taiwan’s Financial Regulator Imposes Stricter Crypto Rules
Hsi-Ho Huang, director of the securities firms division at the Taiwan Financial Supervisory Commission, stated at the FinTechOn conference in Taipei that virtual asset service providers must register under new rules set to take effect in January 2025. Non-compliance with these regulations may lead to criminal penalties, including imprisonment for up to two years.
Taiwan requires virtual asset service providers (VASPs) to comply with anti-money laundering laws based on the Financial Supervisory Commission’s (FSC) rules introduced in July 2021. However, these rules will soon be replaced by a new regulatory framework. While the FSC, appointed as the main regulator for the crypto sector in March 2023, announced these new rules in October, Hsi-Ho Huang, director of the securities firms division, provided further details on the specific requirements and regulatory approach at the FinTechOn conference in Taipei.
FSC’s 2025 Regulatory Framework for Crypto Assets
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The new rules will take effect in January 2025, and the FSC aims to enhance oversight in key areas, including the custody of fiat currency, information security, customer complaint handling procedures, record-keeping, and information disclosure.
Huang emphasized the need for crypto trading platforms to establish clear listing and delisting procedures, implement measures to prevent market manipulation and detect anomalous price and volume activity.
The regulator will mandate that crypto custodians hold client assets in trust or segregate them from the platform’s assets. Annual independent audits of client assets will also be required.
In addition to new compliance registration rules, the FSC is drafting a dedicated crypto asset law. Chair Jin-Lung Peng announced today that the regulator will submit this proposal to the Executive Yuan by June 2025.
In June this year, the domestic cryptocurrency sector established an industry association to implement self-regulatory measures following governmental directives.
Bottomline
Taiwan’s tightening grip on the crypto industry aims to balance innovation with investor protection. The new regulations will enhance oversight, ensure transparency, and develop a more mature crypto ecosystem. While these measures may pose challenges for businesses, they are essential for the industry’s long-term sustainability.
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