Taiwan parliament, the Legislative Yuan, has passed the first reading of a proposed crypto law that would regulate the crypto asset industry.
Taiwan has taken a significant step toward regulating the crypto sector by proposing a special crypto law, which has passed its first reading at the Legislative Yuan (Taiwan’s parliament). This proposed law, co-authored by Yung-Chang Chiang and 16 other lawmakers, would require all cryptocurrency platforms operating in Taiwan to obtain a permit.
Failure to comply could lead to regulatory orders for them to cease operations. While Taiwan’s Financial Supervisory Commission (FSC) had previously released guidelines for the crypto sector to form self-supervisory rules, these measures lacked legal enforceability.
The goal is to establish a regulatory framework that provides oversight and legal enforceability for crypto businesses, emphasizing the necessity of such a law to ensure proper regulation in the cryptocurrency sector.
This was followed when Yung-Chang Chiang, a member of the Legislative Yuan of Taiwan, expressed the intention early this month to have the first draft of this law ready for parliament’s review by the end of November 2023 or even sooner.
The new special law would grant regulatory authorities the power to impose administrative penalties on operators who violate these self-regulation rules. The law aims to address the need for legal enforceability in the sector, as previous self-regulation guidelines lacked such power.
Yung-Chang Chiang, a member of the Legislative Yuan who jointly proposed the special act, said,
“We hope that the Financial Supervisory Commission can also submit their version of a draft bill to the legislature, allowing various sectors of society to further consolidate consensus during the process.”
Taiwan Proposes Crypto Act to Tackle Offshore Market Concerns and Enhance Regulation
The proposed crypto act in Taiwan comes in response to concerns over activity in offshore crypto markets and aims to prevent “regulatory arbitrage.” Lawmakers believe that crypto assets are distinct from traditional financial products and warrant special regulations.
In addition to the proposed law, on September 26, Taiwan’s Financial Supervisory Commission introduced guidelines to enhance investor protections in the cryptocurrency space.
These guidelines cover various aspects of the industry, including separating exchange assets from customer assets, reviewing the listing and delisting of digital assets, and requiring foreign virtual asset service providers to obtain necessary approvals from local regulatory authorities.
On that same day, major cryptocurrency exchanges operating in Taiwan also formed an association to further the interests of the industry.
However, the exact timeline for the second reading of the bill is not specified. Still, it may only occur in January 2024, as the current tenure of all lawmakers in Taiwan ends next January.
Currently, Taiwan requires virtual asset service providers to comply with anti-money laundering laws, but the crypto industry remains largely unregulated.