The 30-page bill strikes a balanced approach in its regulatory requirements for Virtual Asset Service Providers (VASPs). It mandates common-sense obligations such as segregating customer funds from the company’s reserves, implementing an internal control and audit system, and encouraging VASPs to join local trade associations.
Stablecoin Reserves and Marketing Guidelines
Notably, the bill does not currently mandate that stablecoin issuers maintain a 1:1 reserve fund ratio, and it omits specific provisions for algorithmic stablecoins. Additionally, marketing activity regulations will be determined by the competent authority, allowing for flexibility in this area.
Penalties for Unlicensed VASPs
The bill proposes penalties for unlicensed VASPs, with fines ranging from a minimum of 2 million Taiwanese dollars (approximately $60,000) to a maximum of 20 million TWD ($600,000). Existing companies operating in the Taiwanese market will be granted a six-month window to obtain the required license once the bill takes effect.
FSC Industry Guidelines and Self-Regulatory Initiatives
In September 2023, Taiwan’s Financial Supervisory Commission (FSC) had already released comprehensive industry guidelines for VASPs. Notably, the FSC prohibits foreign VASPs from providing their services in Taiwan without obtaining the necessary approvals from the regulator.
These regulatory measures come in response to the proactive stance of major cryptocurrency exchanges in Taiwan. Local exchanges, including MaiCoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito, have united to form the Taiwan Virtual Asset Platform and Transaction Business Association. Their objective is to foster cooperation with regulators and enhance support for the crypto industry, showcasing a commitment to responsible and secure crypto market development.