Taiwan Eyes Special Law for Crypto Regulation, Aims for Investor Safety

Taiwan's Financial Supervisory Commission (FSC) is actively exploring the creation of a unique legal framework to regulate the cryptocurrency market, with a promise to release preliminary findings by September. The initiative, confirmed by FSC chair Tien-mu Huang during a legislative session, underscores the critical need for regulatory oversight bridging traditional financial systems and the burgeoning digital currency space. Aimed at enhancing governance within the cryptocurrency sector, the FSC is working on what is termed a "crypto asset act." This proposed legislation, set to be detailed in its early stages by September, is part of the FSC's broader strategy to safeguard investor interests. In line with this, there's a push towards the establishment of a self-regulatory body by local cryptocurrency enterprises. This move is seen as a pivotal step towards self-governance, allowing the crypto industry to tackle pertinent challenges and uphold compliance standards internally.

Since July 2021, Taiwan has mandated that all cryptocurrency service providers adhere to stringent anti-money laundering (AML) directives. Beyond these AML mandates, the crypto sector operates with minimal regulatory oversight. However, in September 2023, the FSC took a proactive stance by encouraging the crypto community to develop and implement self-regulatory protocols via a potential industry coalition. Further solidifying the move towards a regulated crypto environment, several legislators put forward a draft for a specialized crypto act in October 2023. This legislative proposal is in anticipation of the FSC presenting its comprehensive regulatory approach to cryptocurrency. This anticipated legal framework aims to strike a delicate balance between fostering innovation in the digital currency realm and ensuring robust investor protection and financial stability.

This series of developments signifies Taiwan's concerted efforts to construct a well-defined regulatory landscape for the cryptocurrency industry. By contemplating a specific law for crypto assets, supporting the formation of a self-regulatory organization, and setting the groundwork for comprehensive legislation, Taiwan is positioning itself at the forefront of crypto regulation. The envisioned legal and self-regulatory measures reflect a commitment to nurturing a secure, transparent, and vibrant cryptocurrency market that aligns with global standards for investor protection and financial integrity.