South Asian countries are performing extensive research to establish a well-developed crypto ecosystem. Countries such as Hong Kong have passed a new law for the regulation of virtual assets; South Korea has also planned to bring similar laws to regulate digital assets.
Taiwan is also planning to extend the avenue, scope and market of cryptocurrencies. Interestingly, Taiwan has been deepening its exploration of blockchain technology and Web3 over the past year, with Taiwanese officials announcing the launch of its new Ministry of Digital Affairs (MODA) office in August amid escalating tensions between China and the island country located at the western edge of the Pacific Ocean. It is important to note that China has strict regulation over cryptocurrencies, but it is regulating CBDCs.
Amid this, Telecommunications giant Taiwan Mobile is in talks with local crypto platforms about potential partnerships and investments. The government-licensed wireless service provider is exploring opportunities for collaboration with blockchain-enabled financial institutions, including Taiwan-based XREX, Bloomberg reported, citing people familiar with the matter.
According to a report from Bloomberg, several sources familiar with the matter who asked to remain anonymous have indicated that the government-licensed wireless service provider is in early-stage talks with several crypto firms, including Taipei-based XREX Inc., about forming strategic partnerships in the digital asset space
In Taiwan, there is no domestic legislation that directly applies to crypto assets, although operations using cryptocurrencies may fall under existing laws – specifically, compliance requirements relating to anti-money laundering (AML). The Financial Supervisory Commission (FSC) has stated that Bitcoin is explicitly not within its authority “due to [the] lack of issuer”. Similar reasoning should apply to other virtual currencies.
In 2013, the Central Bank and the FSC issued warnings regarding virtual currencies. Although they have not explicitly stated the difference between virtual currencies and crypto assets, it can be inferred that a broader field, including crypto assets, is considered under the term “virtual currencies”. These warnings noted that “virtual currencies are not legal tender in Taiwan, they are neither a foreign currency nor foreign means of payment”. The Central Bank and the FSC also stated that investors cannot rely on their trust in virtual currencies since organizations or individuals issuing or trading in virtual currencies are not authorized or supervised either by the Central Bank or the FSC.
Other than Bitcoin, the FSC clarified in July 2019 whether its securities regulation would apply to an initial coin offering (ICO) or any other investment activities with virtual currencies and cryptocurrencies. The security token offering (STO) rules published by the Taipei Exchange (TPEx) under the authorisation of the FSC were followed in January 2020 for qualified investors.
Taiwanese regulation concerning virtual currencies on various AML rulings. Effective from 1 July 2021, the Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises Handling Virtual Currency Platforms or Transaction apply to platforms and players of virtual currencies that register their business in Taiwan. Further, the FSC stated in its news release of 30 September 2021 that, as virtual currencies are not regulated, authorized or supervised by the Central Bank or the FSC, they represent highly speculative virtual commodities.
For those crypto assets that are not financial products, there is no specific regulation on owning, holding or trading them on a platform provider. Nevertheless, in July 2022, the FSC officially banned the use of credit cards for the purchase and transaction of virtual currencies. The FSC emphasized that credit cards are not a deferred payment system designed for consumer’s investment and wealth management activity or highly speculative and high-risk leveraged transactions.