The crypto market in Taiwan has been very liberal from a legal standpoint, without much interference from the authorities. However, the situation is about to change, and the first step is the new bill named Virtual Asset Management Regulations Draft, proposed by 17 legislative members, with the aim to abandon the government's hands-off approach and impose a broader regulatory framework.
The bill aims to safeguard investors and providers by creating a structure of rules for virtual assets, generating a higher degree of financial security. The timeline for the acceptance of the bill is still not definitive, but expectations are for the process to spill over into 2024. The decision to reshape the blockchain’s legal landscape in Taiwan came after the rapid growth of the crypto industry.
There are over 200 blockchain companies that are active in Taiwan, and it's the young population that is driving the development. Half of the cryptocurrency investors are younger than 24 years old, and only around 10% are older than 35 years.
This sector was, for the most part, given a lot of freedom. From a regulatory aspect, providers of virtual assets were only required to abide by anti-money regulations, which were introduced in 2021. However, many critics have been vocal about the absence of more comprehensive regulation. There have been initiatives for the Financial Supervisory Commission to expand its oversight and keep pace with the developing market, especially the multiplying operators.
The goals of the new crypto bill
The Virtual Asset Management Regulations Draft will protect investors and boost oversight through several requirements and regulations. It will classify operators, define virtual assets, impose transparent advertising methods, and designate licensing and permits. It will also designate industry association requirements and require customer data protection. On top of that, the law will empower the regulatory body to perform audits, demand companies to perform internal controls, and implement risk management requirements.
It's a comprehensive bill with many more requirements that can bring order to the market and boost investments. However, there are still many hurdles, especially since cryptocurrencies are not recognized as currency by the Central Bank in Taiwan. Although banks cannot accept tokens, there are licenses for exchanges, enabling the conversion of virtual currencies into fiat currencies and vice versa. The Financial Supervisory Commission acknowledges the sale of tokens such as Bitcoin as a sale of a virtual commodity but not as a currency.
Potential island crypto heaven
After the People's Republic of China’s government banned cryptocurrencies in 2021, many of the industry's investors and talent started to migrate to more hospitable environments, and Taiwan was one such example. Legislators were not ignorant of the potential, and one big step was the Taiwanese decision in the last quarter of 2022 to approve licenses for 24 crypto exchanges.
In 2022, the volume of crypto transactions in Taiwan grew by 30%, surpassing other Asian markets. Legislators have been conservative, but the new bill can be a spark to fulfill Taiwan's potential to be a stable and secure landscape for crypto trading and innovation.
