Taiwan has taken a significant step towards regulating the evolving cryptocurrency sector by forming a new industry association as part of the government's efforts to increase oversight and self-regulation. The Taiwan Virtual Asset Service Providers Association has been officially established guided by the Financial Supervisory Commission (FSC), symbolizing a crucial milestone in cryptocurrency regulation within Taiwan.
Composition of the Association
The association consists of 24 cryptocurrency companies, all registered with the FSC to comply with anti-money laundering (AML) regulations. This registration is mandatory for cryptocurrency firms operating in Taiwan, showcasing the government's dedication to combating illegal activities in the cryptocurrency realm. Titan Cheng, the founder and CEO of BitoPro, Taiwan's top cryptocurrency exchange, chairs the association, while Winston Hsiao, co-founder and chief revenue officer of XREX, serves as the vice-chairman.
Establishing such an association is pivotal for enhancing oversight of cryptocurrency trading firms in Taiwan. The government has charged the association with developing self-regulatory rules to govern member companies, expected to uphold sector integrity and meet governmental standards.
Hsiho Huang, director of the securities firms division at the FSC, stressed the importance of developing the virtual asset industry for society and the economy. Huang emphasized the FSC's commitment to fostering a healthy cryptocurrency ecosystem during the launch meeting, beneficial for both the sector and the public.
Development of Self-Regulatory Guidelines
The association's primary focus post-establishment is to create self-regulating guidelines. These guidelines aim to enforce classification and rating management for Virtual Asset Service Providers (VASPs), ensuring sector growth aligns with regulatory norms while safeguarding consumer rights and interests.
Since July 2021, Taiwan has imposed AML requirements on cryptocurrency service providers, representing the initial step towards mitigating financial risks associated with digital assets. However, the cryptocurrency industry currently operates with limited regulation beyond these AML provisions.
As part of efforts to bolster oversight, the Taiwan Ministry of Justice recently proposed amendments to existing AML laws. These amendments necessitate both domestic and foreign cryptocurrency companies planning to operate in Taiwan to register for AML compliance, with potential harsh penalties for non-compliance, including imprisonment for up to two years.
