Taiwan will soon have special legislation to regulate cryptocurrency and its Financial Supervisory Commission will be in charge.
Huang Tien-mu confirmed this to lawmakers in Taiwan’s parliament during a hearing about global banking stability. Bloomberg initially reported the FSC was set to be announced as the regulator, citing sources in the legislature.
Wayne Huang, co-founder and CEO of XREX, welcomed the news, saying that the industry can only grow when it‘s regulated.
“Our next steps would be for the virtual asset service provider industry to collaborate with the FSC to define regulatory operations,” he said, saying one of the first steps is to form an industry self-regulatory body to help develop a set of rules.
Reports say that the FSC won’t be regulating NFTs. Local Taiwan media quote the FSC‘s Huang as saying that as NFTs are still emerging as an asset class, it‘s too early to regulate them.
“Due to the extendability and composability of NFTs, they can represent a broad spectrum of things ranging from commercial products to commodities to securities. Therefore the FSC likely needs more time to develop a proper set of NFT classification guidelines,” XREX‘s Huang adds.
Taiwan has two financial regulators: the Central Bank of the Republic of China (Taiwan’s official name) and the FSC.
The Central Bank regulates monetary policy and foreign exchange regulations while the FSC has a broad remit over everything from banking regulation, securities and futures, to anti-money laundering.
“Getting the balance between experimentation and investor protection is the order of the day,” says Alex Liu, CEO of Maicoin.
Some in Taiwan’s parliament had called for the newly-established Ministry of Digital Affairs (MODA) to be the chief crypto regulator, though others have said that the Ministry is relatively inexperienced in regulation compared to the FSC.
“Militaries use guns and bullets. Let’s say they started using laser guns. Would you expect that to still fall under the defense ministry or a new department of directed energy weapons?” Liu remarked.
FTX pushed Taiwan to regulate
Historically, Taiwan has taken a hands-off approach to crypto regulation only regulating the asset class under the framework of controlling money laundering.
Last September, authorities approved 24 crypto platforms under the island’s AML compliance system.
However, the collapse of FTX added a sense of urgency to Taiwan’s regulatory push as the Taiwanese were one of the largest users of the exchange per capita, attracted by its relatively high-interest rates for USD deposits compared to local banks.
An initial framework for the law is expected by June, with an initial draft for later this year.