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Taiwan legislators are working towards presenting the country’s first crypto regulatory bill in November 2023, according to an exclusive interview granted to the Block’s Timmy Shen.
Parliament member under the Yuan’s arm, Yung-Chang Chiang, stressed the need for a special law to guide cryptocurrency trading and other activities in the country in the interview.
He highlighted the inherent differences between cryptocurrencies and traditional financial investment services, highlighting the need for tailored and industry-specific guidelines.
Furthermore, Chiang pointed out the underlying rationale for this initiative. He stressed the importance of Taiwan avoiding the pitfall of “regulatory arbitrage,” especially in light of the increasing challenges of various foreign crypto operations.
He believes that having a special law protects investors and gives them value in the long run.
Chiang has been active in attaining this goal despite the limited time frame. In an October 6 public hearing, he met with industry experts and service providers to discuss the upcoming draft bill.
In the meeting, he zoomed in on the proposed provisions by the Financial Supervisory Commission (FSC) guidelines regarding how cryptocurrencies should be interacted with.
In the official statement shared on its website on September 26, the FSC stated that all domestic crypto trading platforms must separate customers’ funds from the exchange’s treasury.
Hence, cryptocurrency exchanges must keep customers’ digital funds in separate accounts to prevent fraud.
In addition, they must review the listing and delisting standards for virtual assets and ensure easy access to required information by investors and government agencies.
The guidelines also extend to foreign offshore platforms, with the FSC requiring these international exchanges to complete registration before commencing their operations within the country.
Importantly, the regulatory authority emphasized that domestic and foreign cryptocurrency exchanges must not operate without the necessary approvals.
Lacks Legal Enforceability
Although the FSC is moving in the right direction, Chiang believes this approach lacks legal enforceability.
According to him, there is no approval for an operating permit, and the proposed special crypto law will cover the gap after it is submitted to the Parliament by November.
Crypto exchanges without permits will see their operations stopped until they get the relevant approval in Taiwan.
Chiang said: “In this case, under the authority of this special law, regulatory authorities can impose administrative penalties on operators who violate these self-regulation rules. Without such a special law, regulators would lack the ability to impose penalties.”
Meanwhile, nine crypto exchanges, including MaiCoin, BitoGroup, and ACE, are already working towards creating a crypto industry association to push the interest of the nascent industry.
The group is working towards applying by mid-October to make it official.
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