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In a move to regulate the burgeoning cryptocurrency market, Taiwan's Financial Supervisory Commission (FSC) has announced that all virtual asset service providers (VASPs) operating in the country must register with the regulator by the end of September 2025.
Failure to comply could result in severe penalties, including imprisonment of up to two years and fines of up to NT$5 million (approximately $155,000), Radio Taiwan International reported.
The new anti-money laundering (AML) regulations, which are currently in draft form and expected to take effect on January 1, 2025, aim to enhance the oversight of crypto businesses and mitigate risks associated with illicit activities.
In addition to registration, VASPs will be required to meet specific capital requirements and implement robust customer protection measures, including ensuring that their management teams possess the necessary professional experience and have no criminal convictions.
This latest regulatory development marks a significant tightening of Taiwan's stance on cryptocurrencies. While the country previously introduced AML rules in July 2021, the new requirements mandate even fully compliant firms to re-register with the FSC to avoid penalties.
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Beyond the registration deadline, the FSC also plans to introduce a comprehensive "special law" governing cryptocurrencies. This law, which is being drafted with reference to regulatory frameworks in the European Union, Japan, Hong Kong, the United Kingdom, and South Korea, is expected to be released in June 2025 and subsequently approved by the Executive Yuan, the executive branch of Taiwan's government.
Context and Regulatory Landscape
Taiwan's approach to crypto regulation reflects a broader global trend of increasing scrutiny and oversight of the industry. While the country has previously expressed concerns about the speculative nature of cryptocurrencies and their potential risks, it has also recognized the need to balance regulatory oversight with fostering innovation.
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The new regulations align with international standards and best practices for combating money laundering and terrorist financing in the digital asset space. By imposing registration requirements, capital limits, and customer protection measures, the FSC aims to enhance transparency, reduce risks, and protect investors.
Other Regulatory Developments
While the new regulations represent a significant step towards stricter oversight of crypto businesses, Taiwan has also taken steps to liberalize certain aspects of its crypto market. In recent months, the country has allowed institutional investors and high-net-worth individuals to trade foreign crypto exchange-traded funds (ETFs), albeit with certain conditions and restrictions.
However, it's important to note that Taiwan's financial regulators continue to maintain a cautious stance on cryptocurrencies. In March 2024, the Chairman of the FSC, Huang Tianmu, emphasized the speculative nature of virtual assets and their lack of intrinsic value. He also highlighted the potential risks associated with cryptocurrencies and the need for careful regulation.
