Taiwanese lawmakers are gearing up to introduce the nation’s inaugural cryptocurrency regulation bill in November 2023, as disclosed in an exclusive conversation with the Block’s Timmy Shen.
In the interview, Yung-Chang Chiang, a parliament member from the Yuan’s faction, emphasized the necessity for a dedicated legislation to oversee cryptocurrency trading and related activities within Taiwan.
Chiang underscored the distinct nature of cryptocurrencies in comparison to conventional financial investment mechanisms, suggesting the requirement for custom-made regulations tailored to the crypto industry.
Moreover, Chiang elucidated the primary motivation behind this legislative push. He emphasized Taiwan’s need to sidestep the risks associated with “regulatory arbitrage,” especially considering the growing intricacies linked with foreign cryptocurrency ventures.
Chiang is of the opinion that a dedicated law would safeguard investors and provide enduring benefits.
Despite the pressing timeline, Chiang has been proactive in his pursuit of this objective. On October 6, he convened a public hearing, engaging with industry professionals and service providers to deliberate on the forthcoming draft legislation.
During this discussion, Chiang concentrated on the provisions suggested in the Financial Supervisory Commission (FSC) guidelines concerning the handling and interaction with cryptocurrencies.
As per an official announcement released on their website on September 26, the FSC mandated that all local cryptocurrency trading platforms distinctly segregate customer funds from the operational finances of the exchange.
As a result, cryptocurrency exchanges are obligated to store clients’ digital assets in distinct accounts to deter potential fraudulent activities.
Furthermore, exchanges are required to scrutinize the criteria for both listing and delisting virtual assets, ensuring that both investors and governmental bodies can readily access pertinent information.
These directives aren’t confined solely to domestic entities; they also encompass foreign offshore platforms. The FSC mandates that these global exchanges finalize their registration processes before initiating their business activities in Taiwan.
Crucially, the regulatory body underscored that both local and international cryptocurrency exchanges should refrain from conducting operations unless they’ve secured the requisite authorizations.
Lacks Legal Enforceability
While Chiang acknowledges the FSC’s positive strides, he feels their current approach lacks robust legal backing.
In his view, there isn’t a clear mechanism for obtaining an operating permit under the existing guidelines. The anticipated special cryptocurrency legislation is intended to address this oversight once presented to the Parliament come November.
Cryptocurrency exchanges operating without these permits will have to halt their activities in Taiwan until they secure the necessary approvals.
Chiang remarked, “Under the purview of this dedicated law, regulatory bodies would be empowered to mete out administrative sanctions on entities breaching these self-regulation norms. Absent such a law, regulatory agencies would be rendered ineffective in imposing penalties.”
Simultaneously, nine cryptocurrency exchanges, featuring notable names like MaiCoin, BitoGroup, and ACE, are in the process of establishing a cryptocurrency industry association to champion the interests of this burgeoning sector.
This consortium aims to submit their application by mid-October to formalize the association.