Taiwan's New Virtual Asset Management Bill Targets Enhanced Customer Protection and Industry Regulation
Summary:
Taiwan's legislators have proposed the Virtual Asset Management Bill, targeting enhanced customer protection and industry regulation. The bill, although not currently involving a 1:1 reserve requirement for stablecoins, enforces obligations like segregating customer funds from reserve funds and creating an internal audit system for Virtual Asset Service Providers (VASPs). It proposes heavy penalties for operating without a license and grants a six-month period for firms to get compliant once implemented. This follows the recent formation of a self-regulating association by major Taiwan-based crypto exchanges aiming to support the industry and collaborate with regulators.
Taiwan's single-house parliament, the Legislative Yuan, saw the proposal of the Virtual Asset Management Bill on October 25th by its lawmakers. The intention of the bill is to improve consumer protection and exercise better regulation over the sector. Despite aiding simple logic obligations for virtual asset service providers (VASPs), such as essential separation of customer and reserve funds, the design of an internal auditing system, and membership to the local industry group, the 30-page bill is seemingly relaxed in its requirements. As it stands, it doesn't enforce 1:1 ratio of reserve funds by issuers of stablecoins, nor does it comment on algorithmic stablecoins. Future advertising guidelines will be subject to the discretion of the appropriate regulatory body.The bill proposes substantial financial penalties for unlicensed VASPs, from two million Taiwanese dollars (about $60,000) to as steep as twenty million ($600,000). Once the bill comes into effect, existing businesses in the Taiwanese market will be given a six-month grace period to secure a license. Complementary to this: Circle introduces points-to-crypto initiative with a Taiwanese supermarket.Earlier, in September 2023, the Financial Supervisory Commission (FSC) in Taiwan launched guidelines for VASPs. These specifications deter overseas VASPs from offering their services in Taiwan without the official stamp from the regulator.These regulations came into being around the same time that numerous leading cryptocurrency exchanges in Taiwan united to establish a self-regulating association. On September 26, prominent local exchangers including Maicoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito collaborated to form the Taiwan Virtual Asset Platform and Transaction Business Association. Their collective objective is to back up the cryptocurrency sector and cooperate effectively with authorities. Related article: Is Ethereum restaking, a breakthrough in the blockchain or a risky game?
Published At
10/27/2023 8:56:22 AM
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