Taiwan to Draft Crypto Law to Address Regulatory Concerns

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Taiwanese lawmakers plan to draft a special crypto law by November 2023. The goal is to address the growing concerns about offshore crypto exchanges and prevent the exploitation of regulatory loopholes by the crypto industry. 

On Oct 6, Yung-Chang Chiang, a member of the Legislative Yuan, Taiwan’s parliament, held a public hearing at the parliament to discuss the draft proposal with virtual asset services providers, legal experts, and academics. 

The proposed law would require all crypto platforms in Taiwan to apply for a permit and those failing to do so could be asked to cease operations. 

While talking about the new law, Chiang explained, “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, the regulators would lack the ability to impose penalties.” 

Chiang emphasised the need for a dedicated crypto asset act to govern crypto companies. He asserted that cryptos are distinct from traditional financial products and require separate regulations.

He also informed that Taiwan’s Financial Supervisory Commission (FSC) may propose its version of the special crypto law, but that would take time. He added, “It’s hard to say exactly when the special law will be enacted, but it should likely occur sometime after the middle of 2024.”

Taiwan has been working on developing a crypto regulatory framework for several years. In 2020, the government established the FSC’s Fintech and Innovation Office, which oversees the crypto industry. This year, in September, the FSC published new crypto platform guidelines. However, they lacked legal enforceability. 

One of the critical issues lawmakers are grappling with in Taiwan is regulating offshore crypto exchanges. Offshore exchanges are often not subjected to the same regulations as domestic exchanges, raising concerns about consumer protection and money laundering.

The announcement that Taiwan is planning for a crypto law is a positive development for the crypto industry. It shows that governments are recognising the importance of crypto and creating regulations to safeguard consumers while promoting innovation. 

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash