Newsletter
Promotion Plan of Taiwan's FSC as the Competent Authority of Platforms of Virtual Assets with Financial Investment or Payment Nature
Taiwan's enterprises related to virtual currency have been required to follow the "Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises Handling Virtual Currency Platform or Transaction" to be AML/CFT compliant since 2021. For this purpose, the Financial Supervisory Commission ("FSC") has been designated by the Executive Yuan (the cabinet) as the competent authority of enterprises of virtual currency platforms or transactions under the Money Laundering Control Act, Taiwan's anti-money laundering law ("Taiwan AML Law").
In light of the recent insolvencies of overseas virtual asset exchanges and the trend of international supervisory organizations and regulators continuing to deepen the supervision of virtual asset service providers ("VASPs"), the FSC issued a press release on March 30, 2023, stating that the FSC will enhance customer protection for customers of domestic virtual asset platforms gradually by establishing VASP Guidelines (defined below), promoting self-regulation of VASP associations, and cooperating with other related government authorities. Certain major points of the press release are listed below:
1. Establishing VASP Guidelines:
The FSC will establish the "Virtual Asset Service Provider (VASP) Guidelines" ("VASP Guidelines") in accordance with the Taiwan AML Law, to be supplemented by enhancing industry self-regulation and the principles of information disclosure and transparency. The VASP Guidelines should provide principles regarding information disclosure, review procedures of product launch and withdrawal, segregation of assets between customers and platform operators, fairness and transparency of transactions, AML, protection of customer (consumer) rights, information security, management of operating systems and cold and hot wallets, and audits, so as to strengthen customer protection, improve transaction transparency, and continue to implement money laundering prevention.
2. Promoting self-regulation of VASP associations:
After establishing the VASP Guidelines, the FSC will invite VASPs to promote self-regulation. The VASP associations will establish self-regulatory rules in accordance with the VASP Guidelines to guide VASPs to enhance internal controls and improve the protection of customer rights.
3. Cooperating with other related government authorities in the future:
As virtual assets involve the affairs of various ministries within the government, it is necessary to cooperate with each government authority to enhance self-regulation and accumulate administrative and management experiences of the domestic VASPs, and continue observing the supervisory developments of international organizations and regulators to propose appropriate directions for establishing regulations.
If you have any questions regarding the above-mentioned development of regulatory approaches to virtual currency/ virtual assets, please do not hesitate to contact us.