The 30-page measure seems to provide reasonable requirements for the sector.
The proposed legislation sets a penalty for unlicensed VASPs.
The Virtual Asset Management Bill was proposed to the Legislative Yuan, Taiwan’s unicameral parliament, on October 25. The purpose of the legislation is to “properly supervise” the sector and give “better protection” for consumers.
The 30-page measure seems to provide reasonable requirements for the sector. Also, it recommends that VASPs do things like build up an internal control and audit system, become members of the local trade organization, and keep client funds separate from the company’s reserve assets.
However, it does not yet specify algorithmic stablecoins or compel stablecoin issuers to maintain a 1:1 ratio of reserve funds. Rules for advertising in marketing efforts are left to be established by a “competent authority.”
The bill simply mandates the segregation of client assets from corporate finances, in contrast to Japan’s strict mandate for the employment of custodians for domestically licensed exchanges. The employment of external custodians is not required under this provision.
Stringent Compliance
Moreover, the proposed legislation sets a penalty for unlicensed VASPs between approx. $60,000 and $600,000. Also, after the measure goes into effect, businesses already present in Taiwan’s market would have six months to register.
The Financial Supervisory Commission (FSC) of Taiwan issued regulations for VASPs in September 2023. Without proper authorization from the FSC, overseas VASPs are not allowed to provide their services in Taiwan.
Rules were established because a group of prominent crypto exchanges in Taiwan have banded together to act as a self-regulatory body. The Taiwan Virtual Asset Platform and Transaction Business Association was established on September 26 by local exchanges. Their goal is to aid the crypto sector as well as collaborate with government bodies.