How are crypto assets regulated in Taiwan? – Commentary

In Taiwan, there is no national legislation that directly applies to crypto-assets, although operations using cryptocurrencies may fall under existing laws – specifically, compliance requirements related to anti-money laundering (AML). The Financial Supervisory Commission (FSC) has stated that bitcoin is explicitly not within its purview “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 cryptoassets, it can be inferred that a wider field, including cryptoassets, 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 (currency) nor foreign means of payment”. The Central Bank and the FSC also stated that investors cannot place their trust in virtual currencies since organizations or individuals issuing or trading in virtual currencies are not authorized or supervised by either the Central Bank or the FSC.

Apart from bitcoin, the FSC clarified in July 2019 whether the securities regulation would apply to an initial coin offering (ICO) or other investment activities in relation to virtual currencies and cryptocurrencies. The Security Token Offering (STO) rules published by the Taipei Exchange (TPEx) under the authorization of the FSC followed in January 2020 for qualified investors.⁽¹⁾

Taiwanese regulation with respect to virtual currencies centers on various AML rulings. Effective July 1, 2021, the Anti-Money Laundering and Anti-Terrorism Financing Regulations apply to businesses handling virtual currency platform or transaction for virtual currency platforms and players registering their business in Taiwan. Furthermore, the FSC stated in its news release dated September 30, 2021 that since virtual currencies are not regulated, authorized or supervised by the central bank or the FSC, they represent highly speculative virtual goods.

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 purchases and transactions of virtual currencies. The FSC emphasized that credit cards are not a deferred payment system designed for consumer investment and wealth management activity or for highly speculative, high-risk transactions.

For more information on this topic, please contact Arthur Shay at Shay & Partners by phone (+886 2 8773 3600) or e-mail ([email protected]). The Shay & Partners website can be accessed at www.elitelaw.com.

Endnotes

(1) See the TPEx rules governing the securities firms’ operation of the business of proprietary trading of securities tokens and the TPEx rules for information to be published in prospectuses for applications for securities token offerings for over-the-counter trading.