Lawmakers in Taiwan intend to propose a crypto asset bill for first reading by the end of November. A member of Taiwan’s parliament, Yung-Chang Chiang in an interview with The Block said a dedicated crypto asset act is necessary to regulate crypto firms.
The lawmaker said crypto assets are different from traditional investments in many ways, hence the need for them to have separate laws regulating them. In Line with this, he held a public hearing at the parliament on Friday to discuss the draft proposal with virtual asset services providers, legal experts and academics.
Chiang argued that though Taiwan’s Financial Supervisory Commission already released guidelines for the crypto sector to help the industry self-regulate, the guidelines lack legal backing and so cannot be effective for the industry.
Under the authority of this special law, regulatory authorities can impose administrative penalties on operators who violate these self-regulation rules. “Without such a special law, the regulators would lack the ability to impose penalties,” Chiang added.
The new proposed law, if approved, will require all Taiwan-based crypto platforms to obtain a permit or face a cease-and-desist order from regulators. Currently, Taiwan only has a law that requires virtual asset services providers to comply with anti-money laundering laws since the FSC introduced anti-money laundering rules in July 2021.
Despite the existing AML requirement, Chiang said some crypto companies still don’t comply, but regulators cannot do much without proper rules in place.
“There are still many crypto platforms that have a presence in Taiwan, but have yet to declare AML compliance with the FSC,” Chiang said
Although the Taiwan FSC may propose its own special law crypto law, this may not happen until mid-2024 at the earliest. “It’s hard to say exactly when the special law will be enacted, but it should likely occur sometime after the middle of 2024,” Chiang said.
Crypto Firms Face Banking Challenges
The hearing provided an avenue for crypto firms to also voice their concerns for the industry. One of the participants and representative of global partnerships of Binance, Damien Ho said many crypto firms still face challenges with accessing banking services.
This is in spite of the fact that the FSC’s banking bureau previously asked banks to stop treating crypto platforms as high-risk firms. “In reality we still face many difficulties interacting with banks,” Ho said.
“We also boldly suggest that the Taiwan government should encourage some private or public banks to become more crypto-friendly and handle [crypto firms’] relevant business,” Ho added. “This can help crypto businesses develop in a more regulated and effective manner.”
Exemption for Smaller Firms
While crypto firms in Taiwan agree that crypto regulation is important, they believe smaller crypto firms should be exempted from Chiang’s proposed law. Winston Hsiao, cofounder and Group CRO of Taipei-based crypto exchange XREX, said that compliance is necessary but should be done “step-by-step.”
“If we must discuss the special law at this stage, we hope that the law could regulate crypto platforms by their sizes,” Hsiao said.
He said small-scale firms should be regulated by the self-supervisory rules formulated by the industry association after registration, while bigger firms can be required to get permits. With the proposed regulation, Taiwan could become an attractive destination for crypto firms, as lack of regulation is one of the leading factors holding back crypto development.