- Taiwan’s parliament has taken a big step towards regulating the cryptocurrency industry with the approval of the first reading of a proposed crypto law.
- The proposed law would require all cryptocurrency platforms in Taiwan to obtain permits, signaling a commitment to bring this sector under regulatory oversight.
Taiwan’s Legislative Yuan has passed the first reading of a new crypto law aimed at regulating the crypto asset industry. This proposed law, co-authored by Yung-Chang Chiang and 16 other lawmakers, signals a significant development in Taiwan’s approach to crypto regulation. Here are the key highlights of this decision:
A New Era of Crypto Regulation
Taiwan’s Legislative Yuan, the country’s parliament, has ushered in a new era of crypto regulation by approving the first reading of a proposed crypto law. This law, co-authored by Yung-Chang Chiang and a group of lawmakers, represents a crucial step in bringing the crypto sector under regulatory oversight.
Mandatory Permits for Crypto Platforms
Under the proposed law, all cryptocurrency platforms operating in Taiwan will be required to obtain a permit. Failure to comply with this requirement may result in regulatory orders for these platforms to cease their operations. It’s a clear message from the government that they are serious about bringing the crypto industry into the regulatory fold.
From Guidelines to Legal Enforceability
While Taiwan’s Financial Supervisory Commission (FSC) had previously released guidelines for the crypto sector, these guidelines lacked legal enforceability. This new law seeks to bridge that gap, providing the necessary legal framework to ensure proper regulation in the cryptocurrency sector.
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Chiang’s Determination
Yung-Chang Chiang, a member of the Legislative Yuan, expressed his intent to draft this law for parliament’s review by the end of November 2023 or sooner. This determination highlights the urgency of regulating the crypto industry in Taiwan.
Empowering Regulatory Authorities
The proposed law would empower regulatory authorities to impose administrative penalties on operators who violate self-regulation rules. This move underscores the need for legal enforceability, which was lacking in previous self-regulation guidelines.
Seeking Wider Consensus
Yung-Chang Chiang, one of the co-authors of the proposed law, expressed hope that the Financial Supervisory Commission would also submit their version of a draft bill to the legislature. This collaborative approach aims to consolidate consensus across various sectors of society during the legislative process.
Addressing Regulatory Arbitrage
One of the primary reasons behind the proposed crypto law in Taiwan is to prevent “regulatory arbitrage.” Lawmakers believe that crypto assets are fundamentally different from traditional financial products and, therefore, necessitate special regulations.
Enhancing Investor Protections
In addition to the proposed law, Taiwan’s Financial Supervisory Commission introduced guidelines on September 26 to enhance investor protections in the cryptocurrency space. These guidelines cover various aspects of the industry, such as separating exchange assets from customer assets and regulating the listing and delisting of digital assets.
Industry Associations Formed
On the same day, major cryptocurrency exchanges operating in Taiwan formed an association to further the interests of the industry. This cooperative effort highlights the importance of unity within the crypto sector during this transformative period.
Uncertain Timeline for the Second Reading
While the details of the second reading timeline remain uncertain, it may only occur in January 2024, as the current tenure of all lawmakers in Taiwan ends next January. This indicates that the regulatory process is still in its early stages.
Taiwan’s Current Regulatory Landscape
Currently, Taiwan already requires virtual asset service providers to comply with anti-money laundering laws. However, the crypto industry remains largely unregulated, making this proposed crypto law a significant step forward in ensuring accountability and transparency within the sector.
Conclusion
Taiwan’s Legislative Yuan’s decision to pass the first reading of the proposed crypto law marks a pivotal moment in the country’s approach to regulating the crypto asset industry. With a focus on legal enforceability, mandatory permits for crypto platforms, and collaboration between lawmakers and regulatory authorities, Taiwan is set to create a robust framework for the crypto sector. This move not only addresses the concerns of offshore crypto markets but also prioritizes the protection of investors and the prevention of regulatory arbitrage.
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