Taiwan is taking a tough stance on offshore cryptocurrency exchanges that offer services to its residents without complying with local regulations. According to a senior official from the Financial Supervisory Commission (FSC), the island nation plans to ban such platforms from operating in its jurisdiction.
Taiwan is one of the most progressive and innovative countries in Asia when it comes to cryptocurrency and blockchain technology. The island nation has a vibrant and diverse crypto community, with many startups, exchanges, investors, and enthusiasts. Taiwan also has a supportive and pragmatic regulatory environment, which allows for the development and adoption of crypto-related products and services.
The FSC’s Securities and Futures Bureau Deputy Director-General Tsai Li-ling said that the regulator has been monitoring the activities of offshore crypto exchanges and has found some of them to be violating the Money Laundering Control Act and the Terrorism Financing Prevention Act. She added that the FSC will soon issue a notice to these exchanges, asking them to stop providing services to Taiwanese customers or face legal consequences.
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Tsai explained that offshore crypto exchanges are required to register with the FSC and obtain a license before they can operate in Taiwan. She said that the FSC has already issued licenses to six local crypto exchanges, but none of the offshore ones have applied for one. She also warned that Taiwanese customers who use unlicensed offshore crypto exchanges may face risks such as fraud, hacking, or money laundering.
Taiwan does not have a specific law or regulation that defines or regulates cryptocurrencies. Instead, cryptocurrencies are treated as virtual commodities, which means they are subject to the general rules of the Civil Code and the Commodity Inspection Act. This also means that cryptocurrencies are not considered as legal tender, securities, or electronic currencies in Taiwan.
However, this does not mean that cryptocurrencies are unregulated or illegal in Taiwan. The Financial Supervisory Commission (FSC), the main financial regulator in Taiwan, has issued several guidelines and notices to clarify the legal status and obligations of crypto-related businesses and activities. For example, the FSC has stated that:
Crypto exchanges are required to register with the FSC and comply with anti-money laundering (AML) and counter-terrorism financing (CTF) rules.
Crypto transactions are subject to income tax and capital gains tax, depending on the nature and purpose of the transaction.
Crypto mining is legal in Taiwan, but miners need to obtain a license from the Ministry of Economic Affairs and pay electricity fees according to their consumption.
Crypto ICOs are allowed in Taiwan, but issuers need to follow the Securities and Exchange Act and disclose relevant information to investors.
Crypto derivatives are subject to the Futures Trading Act and need to be approved by the FSC before launching.
Taiwan is constantly updating and improving its crypto regulations to keep up with the fast-changing and evolving crypto industry. The FSC has established a dedicated task force to study and monitor the development of crypto-related businesses and activities, and to propose new rules and measures when necessary.
The FSC has also expressed its intention to adopt a more comprehensive and holistic approach to crypto regulations, which would cover aspects such as consumer protection, market integrity, financial stability, innovation, and international cooperation.
One of the main goals of the FSC is to create a friendly and conducive environment for crypto innovation and adoption in Taiwan, while ensuring that potential risks and challenges are properly addressed. The FSC has stated that it welcomes constructive feedback and suggestions from the crypto community and other stakeholders, and that it is open to dialogue and collaboration with them.
Taiwan is undoubtedly one of the most promising and attractive markets for crypto enthusiasts and entrepreneurs in Asia. With its progressive and pragmatic crypto regulations, Taiwan offers a unique opportunity for anyone who wants to explore and participate in the crypto space there.
The FSC’s move is part of its efforts to enhance the oversight and regulation of the crypto industry in Taiwan, which has seen a surge in popularity and adoption in recent years. The FSC has also been working on drafting a comprehensive legal framework for crypto assets, which is expected to be completed by the end of this year. The FSC hopes that by establishing clear and consistent rules, it can foster a healthy and orderly development of the crypto market in Taiwan, while protecting the interests and rights of investors and consumers.