Taiwan’s Financial Supervisory Commission (FSC) is poised to implement enhanced regulations governing cryptocurrency listings on exchanges, with a set of new rules taking effect in January 2025. This initiative reflects a significant step toward bolstering the regulatory environment for digital assets in the region, as the FSC seeks to improve compliance and safeguard both investors and institutional participants within the rapidly evolving crypto market.
Heightened Compliance Requirements by the FSC
With the upcoming regulatory framework, virtual asset service providers (VASPs) will be required to complete rigorous anti-money laundering (AML) compliance registration. Hsi-Ho Huang, the director of the securities firms division of the FSC, provided insights on the matter during the FinTechOn conference held in Taipei. He highlighted that the additional scrutiny will not only encompass the processes of listing and delisting crypto assets but will also introduce extensive criteria focusing on record-keeping practices.
Key Points of the January 2025 Regulations
- AML Compliance Registration: All VASPs will be mandated to complete AML compliance registration to operate legally, with penalties for non-compliance potentially reaching up to two years of imprisonment.
- Enhanced Scrutiny: This includes strict oversight of fiat custody, information security, customer complaint procedures, record-keeping, and information disclosure practices.
- Clear Listing Procedures: Trading platforms will be obliged to develop transparent procedures for listing and delisting assets, along with mechanisms to prevent unfair trading practices and identify unusual price movements and volume spikes.
- Custody Regulations: Crypto custodians must place client assets in a trust arrangement, ensuring they are segregated from the trading platform’s proprietary assets. An annual report issued by a certified public accountant (CPA) will also be a requirement for client asset oversight.
Future Legislative Initiatives
Beyond the introduction of these compliance measures, the FSC is also drafting a specialized law proposal dedicated to the regulation of crypto assets. Jin-Lung Peng, chair of the FSC, announced intentions to submit this proposal to the Executive Yuan—Taiwan’s highest administrative body—by June 2025. As part of these sweeping changes, the Taiwanese crypto landscape is evolving, underscored by the recent establishment of an industry association aimed at developing self-regulatory guidelines in alignment with governmental frameworks.
In summary, the Taiwanese FSC’s decisive actions signal a determined shift towards a more regulated digital asset marketplace. By laying the groundwork for stringent compliance and oversight mechanisms, the FSC aims to enhance the stability of the crypto sector while fostering a safer trading environment for all stakeholders involved.
“By heightening scrutiny, we are ensuring that trust and security are at the forefront of cryptocurrency dealings in Taiwan,” stated Hsi-Ho Huang.
In this evolving landscape, stakeholders will need to stay vigilant and prepared for the impending changes to compliance protocols and operational standards come January 2025.
