Taiwan’s legislators are actively pursuing the introduction of the nation’s inaugural cryptocurrency regulatory bill, scheduled for presentation in November 2023. This exclusive revelation comes from an interview with parliament member Yung-Chang Chiang conducted by Timmy Shen of The Block.
During the interview, Yung-Chang Chiang, representing the Yuan’s arm, underscored the pressing need for a dedicated legal framework governing cryptocurrency trading and related activities within Taiwan. He emphasized the profound disparities that exist between cryptocurrencies and conventional financial investment services, highlighting the necessity for tailored, industry-specific regulations.
Furthermore, Chiang elucidated the fundamental rationale behind this initiative. He voiced concerns about Taiwan potentially falling prey to “regulatory arbitrage,” particularly given the growing complexities surrounding various foreign cryptocurrency operations. He firmly believes that enacting specialized legislation will safeguard investors and ultimately contribute to their long-term well-being.
Chiang has been vigorously pursuing this objective within a tight timeframe. On October 6, he conducted a public hearing, engaging industry experts and service providers in discussions concerning the impending draft bill.
During this session, Chiang scrutinized the proposed guidelines from the Financial Supervisory Commission (FSC) regarding the appropriate handling of cryptocurrencies. The FSC had declared on its website, in an official statement dated September 26, that domestic cryptocurrency trading platforms must segregate customers’ assets from the exchange’s own holdings. Therefore, cryptocurrency exchanges are mandated to maintain separate accounts for customers’ digital assets to thwart fraudulent activities. Additionally, they are tasked with revising the criteria for listing and delisting virtual assets and ensuring convenient access to essential information for both investors and government agencies.
These guidelines also extend their purview to foreign offshore platforms, with the FSC stipulating that international exchanges must complete registration before commencing operations within the country. Notably, the regulatory authority emphasized that domestic and foreign cryptocurrency exchanges must not operate without the requisite approvals.
However, Chiang contends that this approach, while commendable, lacks the necessary legal enforceability. He contends that there is currently no provision for an operating permit, and the proposed specialized cryptocurrency law aims to address this gap once it is submitted to the Parliament in November. Consequently, cryptocurrency exchanges lacking permits will face suspension of operations until they obtain the requisite approval in Taiwan.
Chiang explained, “In this scenario, with the authority vested in this specialized law, regulatory bodies will have the ability to levy administrative penalties on operators who breach these self-regulatory rules. Without such specialized legislation, regulators would be powerless to impose penalties.”
Meanwhile, a consortium of nine cryptocurrency exchanges, including MaiCoin, BitoGroup, and ACE, is actively working toward establishing a cryptocurrency industry association to advocate for the burgeoning sector’s interests. This consortium is on track to apply for official recognition by mid-October.