Taiwan’s Crypto Reform: Understanding the New Bill in Parliament
A new cryptocurrency bill, the Virtual Asset Management Bill , was introduced in Taiwan’s parliament, the Legislative Yuan, on October 25, 2023. The bill, which is still in the early stages of development, is expected to provide the country with a regulatory framework for cryptocurrencies. The bill is expected to cover a wide range of topics, including cryptocurrency definition, crypto exchange licensing, and crypto asset taxation.The primary goal of the bill is to establish rules for virtual asset service providers (VASPs) to protect investors and maintain financial stability. In this article, we will discuss the details of Taiwan’s crypto bill, explore the regulatory landscape in the country, the implications for businesses and investors, and take a look at the future of crypto in Taiwan.
The Details of Taiwan’s Crypto Bill
The new cryptocurrency bill introduced in Taiwan’s parliament is designed to set up a complete regulatory framework for cryptocurrencies. It aims to address a variety of aspects of the cryptocurrency industry, including licensing, anti-money laundering measures, and consumer protection. Taiwan hopes to improve transparency and security within the crypto ecosystem and promote innovation and economic growth by implementing this new law.
Yung-Chang Chiang, a parliament member involved in proposing the act, told The Block, “After the first reading of the bill, discussions on the regulatory framework for the virtual asset industry have moved forward to the next stage.”
Some of the key features included in the Virtual Asset Management Bill are as follows:
Definition of virtual assets: Virtual assets are defined in the bill as digital representations of value that can be transferred, stored, and exchanged electronically.
Licensing of VASPs: VASPs must obtain a license from the Financial Supervisory Commission (FSC) under the bill. A number of conditions will apply to the license, including sufficient capital, risk management, and anti-money laundering (AML) regulation.
Taxation of virtual assets: The bill taxes virtual assets as capital gains. The capital gains tax rate will be based on the taxpayer’s income bracket
Fines: The bill proposes fines of minimum 2 million Taiwanese dollars (approximately $60,000) to 20 million TWD ($600,000) for VASPs operating without a license. Companies that are already operating in the Taiwan market will have six months to obtain a license after the bill goes into effect .
The bill proposes to set up a specialized regulatory agency to monitor and regulate the operations of crypto businesses. This agency will establish a licensing system to ensure that only approved and trustworthy organizations operate in Taiwan’s cryptocurrency market. Additionally, it will implement strict anti-money laundering measures that meet with international standards in order to prevent illegal activities and protect the financial system’s reliability.
Regulatory Landscape in Taiwan
There was no clear regulatory framework for cryptocurrencies in Taiwan before the introduction of the new crypto bill. The Taiwanese Financial Supervisory Commission (FSC) issued a number of cryptocurrency-related guidelines and regulations, but these were not accurate or legally mandatory. Cryptocurrencies were treated as unregulated assets, and crypto exchanges didn’t have to obtain a government license.
Taiwan has taken the lead in developing a regulatory framework for cryptocurrencies. In 2018, the country passed the “Money Laundering Control Act,” which required cryptocurrency exchanges to follow anti-money laundering regulations. This earlier step highlighted Taiwan’s commitment to preventing money laundering and terrorist financing through cryptocurrencies.
Since the FSC introduced anti-money laundering rules in July 2021, Taiwan has instructed virtual asset service providers to keep up with anti-money laundering laws. Otherwise, the cryptocurrency industry is mostly unregulated.
Taiwan is about to take its regulatory efforts to the next level with the introduction of the new crypto bill. The country hopes to ensure effective regulation and supervision of the crypto industry by establishing a specialized regulatory agency. Although the timeline for the bill’s second reading is not clear , experts suggest that it may extend beyond January 2024, which will occur with the end of the current legislators’ period in Taiwan.
Implications for Businesses and Investors
The new crypto bill in Taiwan has significant implications for both businesses and investors. To begin with, from a business perspective , the implementation of a licensing system and anti-money laundering measures will bring clarity and accountability to the industry. It will level up the competition for legitimate businesses while reducing the risks caused by fraudulent or suspicious operators.
For investors, the introduction of the new crypto bill indicates higher levels of regulation and protection. Investors can have greater confidence in the legitimacy and security of the crypto projects they choose to invest in because of the specialized regulatory agency and strict licensing criteria. This increased level of trust plays an important role in attracting both domestic and international investment, increasing the cryptocurrency’s growth.
The Future of Crypto in Taiwan
Taiwan is presenting itself as a progressive and transparent jurisdiction in the field of crypto with the introduction of the new crypto bill. This move is expected to attract innovative blockchain startups and crypto businesses. The bill’s regulatory framework will provide clarity and guidance, contributing to the growth of Taiwan’s crypto industry.
Moreover, the establishment of a specialized regulatory agency demonstrates Taiwan’s commitment to staying ahead of the competition and creating a favorable environment for cryptocurrency investments. The country understands the potential of cryptocurrencies and blockchain technology to revolutionize a variety of industries, including finance, supply chain management, and healthcare. Taiwan is setting up the way for greater adoption and utilization of these technologies within its own territory by embracing crypto regulation.
In conclusion, Taiwan’s new crypto bill represents a significant step forward in the country’s journey towards a regulated and developing crypto ecosystem. Taiwan aims to balance innovation and security by focusing on licensing, anti-money laundering measures, and consumer protection. The implications for businesses and investors are significant, with increased transparency and trust expected to boost industry growth. Taiwan’s crypto landscape is about to rise as the future evolves, attracting new players and developing technological advancements that will shape various sectors of the economy.