Good day everyone,
I hope you are all well and having excellent day, welcome to CryptoGod-1’s blog on all things crypto. In this post I will be looking at the recent news from Taiwan of an impending draft bill on cryptocurrency legislation, due in November 2023.
Taiwan Legislation
The nation of Taiwan is approaching its first crypto regulatory bill, which is due by the end of November 2023. The legislators are working towards presenting this crypto regulatory bill while parliament member Yung-Chang Chiang has stressed the need for special laws to both guide and regulate cryptocurrency trading. He went on to highlight the differences between cryptocurrencies and traditional financial investment services, making a particular note of highlighting the required for a more tailored approach to crypto with industry-specific guidelines.
Chiang also pointed to the underlying rationale for this initiative being the importance of Taiwan avoiding the pitfall of "regulatory arbitrage." This has become especially important given the rising challenges of various foreign crypto operations. He also believe bringing in new and specific laws for the space will help to protect investors by giving them value in the long run.
Chiang has been extremely active in pushing ahead with the goal of regulation, this being despite the limited time frame given it was only on the 6th of October 2023 that he met with industry experts and service providers to discuss the upcoming draft bill. During the meeting Chiang zoomed in on the proposed provisions by the Financial Supervisory Commission (FSC) guidelines for how to interact with cryptocurrencies.
On the 26th of September 2023 the FSC stated in an official statement shared on its website that all domestic crypto trading platforms must separate customers' funds from the exchange's treasury. Basically this is a requirement for the exchanges to keep their customers' digital funds separately from their own private and business account. This will be done in an attempt to prevent fraud, and ensure exchanges cannot do like Sam Bankman-Fried / FTX did with their customers funds.
The exchanges will also be required to review the listing and delisting standards for virtual assets in a bid to ensure they have easily accessible information for investors and government agencies. These guidelines extend beyond the borders of Taiwan, as foreign offshore platforms will also need to complete registration before commencing their operations within the nation according to the FSC. The regulatory authority was also quick to point out that all domestic and foreign cryptocurrency exchanges will not be allowed to operate without the necessary approvals.
While the FSC is aiming to move in the right direction in terms of cryptocurrency regulation, Chiang believes this approach lacks legal enforceability. He pointed out that there is currently no approval for an operating permit, meaning the proposed special crypto law will ensure any gaps and loopholes are tightened once it is submitted to the Parliament by November. Any cryptocurrency exchange operating without a permit after the legislation is passed will be forced to cease operations until they receive the relevant approval in Taiwan. Chiang noted:
"In this case, under the authority of this special law, regulatory authorities can impose administrative penalties on operators who violate these self-regulation rules. Without such a special law, regulators would lack the ability to impose penalties."
Currently there are nine cryptocurrency exchanges, including MaiCoin, BitoGroup, and ACE, which are working towards creating a crypto industry association to push and strengthen the interests of the industry. They are aiming to make their group official and will apply to do so by mid-October 2023.
Have a great day.
Peace. CryptoGod-1.
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