In a significant development, Taiwan is moving closer to the implementation of a crypto law aimed at regulating offshore cryptocurrency exchanges and preventing regulatory arbitrage.
Lawmakers in Taiwan are actively working on a legislative framework that could reshape the cryptocurrency industry in the country.
Drafting Procedures
The proposed special crypto law is gaining momentum, with Yung-Chang Chiang, a member of the Legislative Yuan in Taiwan, leading the charge.
According to recent reports from The Block, the goal is to have the first draft of the law ready for parliamentary review by the end of November, if not earlier.
Chiang stressed the necessity of this dedicated legislation, highlighting that cryptocurrencies fundamentally differ from traditional financial products.
Public Hearing and Stakeholder Involvement
In a show of transparency and inclusivity, Taiwanese lawmakers conducted a public hearing in the country’s parliament. The hearing brought together a diverse group of stakeholders, including virtual asset service providers (VASP), legal experts, and scholars. This open forum allowed for discussions on the draft proposal and provided a platform for various perspectives to be considered in the development of the crypto law.
Addressing AML Compliance and Regulatory Gaps
Taiwan has not been complacent regarding cryptocurrency regulation. Since July 2021, virtual asset service providers in the country have been required to comply with anti-money laundering (AML) laws introduced by the Financial Supervisory Commission (FSC).
However, concerns persist due to the presence of crypto platforms operating without declaring AML compliance. The absence of a specialized regulatory framework has limited regulators’ ability to take effective action against non-compliant entities.
Read: Taiwan Tightens Rules, Bans Unregistered Foreign Crypto Exchanges
Timeline and Challenges
The legislative process may extend beyond the initial draft submission. The current legislative session is expected to conclude by the end of this year, and Chiang acknowledges that the law may not undergo all three readings during this period. Moreover, an upcoming election and a focus on budgetary matters may impact the legislative timeline.
Officials in Taiwan are looking towards implementing the law sometime after the middle of 2024, which indicates the complexity and deliberation involved in the legislative process, allowing for careful consideration of the law’s implications and potential adjustments based on industry feedback and evolving crypto market dynamics.
Banking Challenges and Industry Cooperation
One of the challenges facing the cryptocurrency industry in Taiwan is the difficulty crypto platforms encounter in accessing suitable banking services. Binance, one of the world’s largest cryptocurrency exchanges, has raised concerns about this issue. Despite efforts by Taiwan’s banking bureau to encourage banks to treat crypto platforms as less risky entities, significant challenges persist.
Read: The Decentralized Financial Revolution: How DeFi Is Shaping The Future Of Money (2023)
In response to these challenges, Damien Ho, Binance’s global partnerships representative, suggested that the Taiwanese government should proactively encourage both private and public banks to adopt a more crypto-friendly stance and handle relevant crypto business. This, Ho argued, could foster a more regulated and effective environment for crypto businesses to thrive.
Final Thoughts
Taiwan’s progress toward a special crypto law follows recent regulatory initiatives by the Financial Supervisory Commission. These guidelines cover various aspects, including the segregation of customer and exchange assets, mechanisms for reviewing the listing and delisting of digital assets, and the requirement for foreign virtual asset service providers to obtain local regulatory approvals to operate in the country.
As the country continues to refine its regulatory framework for cryptocurrencies, the impending crypto bill represents a crucial step towards addressing regulatory gaps, preventing offshore exchanges from evading oversight, and fostering a more secure and supportive environment for the burgeoning cryptocurrency industry in the country.