The Financial Supervisory Commission (FSC) of Taiwan has recently announced new rules aimed at improving protections for cryptocurrency investors. On September 26, the FSC released a set of industry guidelines for virtual asset service providers (VASPs) operating in the country.
The guidelines include several key points for regulating the cryptocurrency market in Taiwan. One important rule is the separation of exchange’s treasury assets from customer assets. This is intended to prevent any possible misappropriation of customer funds and enhance the security of the crypto exchanges. The FSC also emphasizes the need for robust mechanisms for listing and delisting virtual assets, ensuring that only legitimate and reliable assets are traded on the platforms.
In addition, the FSC is requiring foreign VASPs to obtain necessary approvals from the regulator before providing their services in Taiwan. The authority stated that overseas virtual asset platform operators must be registered in accordance with the law to conduct business within the country. This measure is aimed at preventing unregulated and potentially risky activities in the Taiwanese crypto market.
Furthermore, the FSC has encouraged VASPs to promote self-regulation within the cryptocurrency industry. Industry associations representing VASPs are expected to develop self-regulatory norms based on the contents of the FSC’s guidelines. This collaborative approach between regulators and industry players aims to establish a well-regulated and transparent crypto ecosystem in Taiwan.
The issuance of these guidelines coincides with the establishment of a joint self-regulatory association by major crypto exchanges in Taiwan. On September 26, local exchanges such as Maicoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito officially formed the Taiwan VASP Association. The association is dedicated to promoting the cryptocurrency industry and assisting regulators in ensuring a safe and fair market for investors.
It is worth noting that not only local exchanges but also major global crypto trading firms are currently providing services to customers in Taiwan. For example, Kraken exchange offers “full services to clients living in Taiwan,” while ByBit exchange supports Visa and Mastercard payments in the country. However, it is unclear how these exchanges will respond to the new regulations and whether they will seek registration with the FSC.
The FSC’s move towards stricter regulations comes after reports in early September that the commission had draft guidelines for the management of virtual currencies in the country. The FSC has been tasked with assuming primary regulatory authority over cryptocurrencies in Taiwan starting in 2023. The aim is to strengthen investor protection and mitigate risks associated with the rapidly evolving crypto market.
In conclusion, the FSC’s introduction of new rules for regulating the cryptocurrency market in Taiwan demonstrates the country’s commitment to ensuring investor protection and fostering a well-regulated crypto industry. With the issuance of these guidelines, the FSC aims to enhance the security and transparency of crypto exchanges, both local and foreign, operating in Taiwan. The establishment of a self-regulatory association by major local exchanges further signals the industry’s willingness to collaborate with regulators for the benefit of all stakeholders. As the primary regulator of cryptocurrencies in Taiwan, the FSC is taking proactive steps to address the challenges and opportunities presented by the growing crypto market.
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