Taiwan Announces ban on Crypto Purchases using Credit Cards
- Credit card issuers in Taiwan will have to comply with the new law within three months.
- FSC issued a letter to the regional banking association demanding credit card companies not to grant “merchant status” to virtual asset providers.
- FSC has long cautioned against crypto, citing their “highly speculative and volatile” nature.
Taiwan’s Security watchdog-Financial Supervisory Commission (FSC), to ban banned cryptocurrency transactions with credit cards in the country. FSC revealed that it had issued a letter to the regional banking association earlier this month, demanding credit card companies not to grant “merchant status” to virtual asset providers.
The financial watchdog has also specified that credit cards are essentially consumer payment tools, not investment and wealth management or payment tools with high speculative, high risk, and high financial leverage transactions. According to media reports, credit cards will also be prohibited for payments tied to gambling, stocks, futures, options, and other transactions.
Credit card issuers in Taiwan will have to comply with the new law within three months. The end of 3 months will be followed by an independent audit unit that will review compliance and report results to the FSC.
Taiwan was touted to emerge as a major crypto hub following Mainland China’s crackdown on crypto last year. However, the increase in crypto scams coupled with the skeptical stance of FSC towards crypto has made people more hesitant towards crypto investment in the country. Last year Taiwanese police arrested 14 people over a crypto investment scam that allegedly defrauded more than 100 people out of US$5.41 million.
FSC has long cautioned against crypto citing their “highly speculative and volatile” nature. The prices of virtual assets fluctuate quickly and incur high investment risks. The public is advised to thoroughly study the business model before engaging in transactions in order to avoid fraud or investment losses from damaging their interest”, the FSC press release from 2021 reads.
Over the years, Taiwan has taken a hyper-vigilant approach to money laundering introducing anti-money laundering laws for digital asset service providers in 2021. The AML rules require local exchanges to report transactions above $17,900 conducted in cash. The law mandate customers to complete a mandatory know-your-customer KYC requirement before using any crypto exchange.
Taiwan’s Central bank has also recently warned against investing in non-fungible tokens (NFTs) because the NFT market is full of fake transactions. Despite this, the Taiwanese central bank is currently exploring a no-interest CBDC (central bank digital currency).
The CBDC is in its second stage of development and is also now being distributed in five selected Taiwanese banks. Since crypto scams plague the nation often, more comprehensive regulation is needed to ensure safe and secure crypto investments for Taiwanese people.