Taiwan is poised to join the growing list of nations implementing comprehensive regulations for the digital asset industry. The Taiwan Financial Supervisory Commission (FSC) has revealed a set of ten guiding principles aimed at fostering innovation while safeguarding the interests of investors, according to reports in local media.
Among the notable provisions in these new guidelines is an enhanced crackdown on offshore cryptocurrency exchanges that target Taiwanese investors without acquiring the necessary licenses from the FSC. This move puts Taiwan in line with other countries that have recently taken action against exchanges such as Binance, Bitfinex, and Kraken, which have operated in various jurisdictions without complying with regulations for an extended period.
These exchanges have historically contended that existing financial regulations do not adequately cover digital assets. However, regulators worldwide are quickly catching up, with Binance, for instance, facing regulatory actions in Canada, Cyprus, Austria, and the Netherlands. Other platforms like Kraken, Poloniex, BitMEX, Bitfinex, and BitFlyer have also had to settle charges by paying substantial fines.
Taiwan was particularly affected by the collapse of FTX, with a user base larger than that of India, the U.K., Italy, Thailand, and several other digital asset hubs combined.
In addition to addressing non-compliant exchanges, Taiwan’s new regulations will require Virtual Asset Service Providers (VASPs) to obtain approval from the FSC before running advertisements. VASPs must also segregate customer assets from their operational capital and establish robust anti-money laundering (AML) programs. The FSC has also prohibited the offering of derivative products, which it deems too complex for retail investors, with violators potentially facing up to seven years in prison.
Taiwan designated the FSC as the primary watchdog for digital assets back in March, with a specific focus on payment and trading-related assets. Notably, the agency does not currently regulate Non-Fungible Tokens (NFTs), with Chairman Huang Tien-mu stating that the unique characteristics of NFTs, including their “extendability and composability,” necessitate more comprehensive regulatory measures.
