Key Takeaways :
- Nine Taiwanese crypto exchanges created a working group aimed at setting up industry associations.
- The Taiwan crypto association will base its rules on government guidelines to enhance industry discipline.
Taiwan’s cryptocurrency sector is taking steps to establish an industry association as the country’s financial regulator prepares to release official guidelines later this week.
Nine cryptocurrency firms issued a joint statement announcing their intention to apply for the formation of an industry association in mid-October. They have also formed a working group to expedite this process.
Since July 2021, Taiwan has required virtual asset services providers (VASPs) to adhere to anti-money laundering (AML) laws mandated by the Financial Supervisory Commission (FSC). However, apart from AML regulations, Taiwan’s cryptocurrency industry has mostly operated without formal oversight. The FSC is on the brink of unveiling comprehensive guidelines concerning cryptocurrency trading and payments for VASPs by the end of this month.
This move represents a significant milestone in Taiwan’s efforts to enhance cryptocurrency oversight comprehensively. In addition to virtual currency operators, the association intends to involve prominent participants from traditional banks, fintech sectors, accounting firms, and insurance industries, thereby expanding the cryptocurrency ecosystem’s reach.
Interestingly, this development aligns with Taiwan’s plans to introduce new regulations for virtual asset service providers (VASPs) this month. These regulations are expected to include restrictions on foreign cryptocurrency exchanges that are not registered in Taiwan.
These forthcoming guidelines seek to transform the cryptocurrency landscape by introducing a comprehensive regulatory framework, drawing inspiration from Hong Kong’s VASP licensing model.
Notably, the proposed guidelines place a strong emphasis on consumer protection. They recommend implementing specific ratios for hot and cold wallet holdings concerning customer deposits on cryptocurrency exchanges, a measure designed to enhance the security of customer funds.
Furthermore, the guidelines propose mandatory insurance coverage against user losses, further fortifying consumer trust in the cryptocurrency ecosystem.
The FSC is set to issue its “Guiding Principles for the Management of Virtual Asset Platforms and Trading Businesses” by month’s end. The move to establish an industry association is regarded as a proactive step taken by cryptocurrency firms to harmonize their self-regulatory guidelines with the upcoming regulatory framework, promoting a more mature and responsible cryptocurrency industry in Taiwan.