On October 25, Taiwanese lawmakers introduced the Virtual Asset Management Bill to the Legislative Yuan, the nation's unicameral parliament, with the aim of providing enhanced customer protection and industry regulation.
The 30-page bill does not impose stringent demands on the virtual asset industry. It introduces practical requirements for virtual asset service providers (VASPs), including the need to maintain clear separation between client funds and company reserve funds, the establishment of robust internal controls and audit systems, and participation in local industry associations.
The bill, however, does not currently mandate stablecoin issuers to maintain a 1:1 reserve ratio, nor does it mention algorithmic stablecoins. Marketing campaigns and advertising rules will be overseen by the "competent authority."
The bill proposes fines ranging from NT$2 million (approximately US$60,000) to NT$20 million (approximately US$600,000) for VASPs operating without a license. Companies already operating in the Taiwanese market will be given a grace period of six months to obtain the required license after the bill comes into effect. In September 2023, the Financial Supervisory Commission (FSC) of Taiwan issued guidelines for the virtual asset service provider industry, which included prohibitions on foreign VASPs offering services in Taiwan without the necessary approvals from the regulatory agency.
These rules were established in collaboration with Taiwan's major cryptocurrency exchanges, which formed self-regulatory associations. On September 26, local exchanges like MaiCoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito joined forces to create the Taiwan Virtual Asset Platform and Trading Business Association. Their primary goal is to support the cryptocurrency industry and collaborate with regulators to ensure responsible and transparent operations in the sector.
