The Financial Supervisory Commission (FSC) – which is the main financial regulator in Taiwan – released a note for the banking industry, stating that virtual assets providers (VASPs) should not be permitted by them to play the role of a merchant to provide services to the holders of credit cards. That signifies a de-facto restriction over the purchase of crypto via credit card within Taiwan’s jurisdiction.
Taiwan Enacts an Indirect Ban on Credit Cards’ Use to Purchase Crypto
According to the report by native media on 21st July, a letter was sent by The Financial Supervisory Authority to the Association of Banks in the initial days of the month, re-asserting the claim that the nature of the crypto assets is highly hazardous and speculative, and the efficient monitoring of the transfers is considerably challenging and complex in terms of cash flow.
Apart from this, the regulator has pointed out that the status of the credit cards is that of the payment instruments used by the customers rather than being wealth management and investment as well as there are huge risks involved in their use. It cited the longstanding practice of keeping the holders of credit cards from recompensing for stocks, online gambling, and gambling, among the rest of such things.
The FSC directs the banks to structure new guidelines during the coming three months. Following that, a review is required to be executed by the audit unit over the internal compliance as well as reporting of the results to the FSC. This is not the initial time for FSC to take action or express its fundamentalism regarding cryptocurrency. In the previous year, many pass releases were issued by the regulator to make the public aware of the risks linked to the virtual assets.
Taiwan’s Endeavors to Launch a CBDC
In 2021’s July, the renovation, as well as the enactment of the anti-money laundering (AML) requirements, was executed by Taiwan in the case of crypto exchanges, per the recommendation of the Financial Action Task Force. After that, in June, the governor of the Central Bank of the Republic of China (Taiwan), proposed a no-interest structure to be utilized for the pilot of the central bank digital currency (CBDC) of the country.
At the moment, Taiwan is going through the 2nd phase of the pilot program of its CBDC. In the respective project, the central bank is offering the CBDC to 5 chosen banks within Taiwan to distribute it among the customers.