The formulation of the Virtual Asset Service Provider (VASP) special law finally has a clear process. Financial Supervisory Commission Chairman, Kung-Long Peng, will report to the Finance Committee on the 12th, with plans to gradually promote the management of virtual asset operators in four stages. The special law draft is expected to be submitted by the end of 2024, with the aim to complete the draft and submit it for parliamentary review by June 2025.
Financial Supervisory Commission publicly confirmed the special law for the first time
Phase One: Include virtual asset operators
Phase Two: Establish an association and formulate self-regulatory rules
Phase Three: Enhance anti-money laundering management
Phase Four: Formulate the special law
This is the first time the Financial Supervisory Commission has publicly revealed the schedule and plan for establishing the Virtual Asset Management Special Law. The formulation of the law will take into account international regulatory standards, focusing on six regulatory key points including operator licensing conditions, consumer protection, capital requirements, asset management, market trading behavior norms, and business development.
In the first phase, the Financial Supervisory Commission will start including relevant operators by focusing on the anti-money laundering measures of Virtual Asset Service Providers (VASPs). Currently, 25 operators have completed compliance declarations, with business types covering exchanges, trading platforms, physical stores, virtual asset ATMs (BTMs), and custody system providers.
Phase Two will push for VASPs to establish an association and formulate self-regulatory rules. The association will develop self-regulatory rules based on the eight guiding principles set by the Financial Supervisory Commission. VASPs are expected to officially establish the association this Thursday (the 13th).
In the third phase, the Financial Supervisory Commission will add VASP registration system in the anti-money laundering law, clearly defining VASP and imposing criminal penalties on illegal operators. VASPs engaging in business without proper registration can face up to two years in prison and a fine of up to 5 million NT dollars. The Financial Supervisory Commission plans to manage registered VASPs differentially based on the complexity of their business.
VASPs operating as exchanges must adhere to the most comprehensive internal control regulations, including match trading rules explanation, information system establishment (complying with ISO27001 information security regulations), wallet management (with at least over half in cold wallets), and platform and customer asset segregation.
Among the 25 VASPs that have completed anti-money laundering compliance declarations, such as ACE, BitoEx, MaiCoin, XREX, HOYA, etc., all fall under the exchange type and must adhere to complete regulations.
The final phase will move towards the formulation of the special law. The Financial Supervisory Commission will outsource the study on VASP management law in January 2024, considering various national and international standards, and determine the six major regulatory key points. The research team is expected to submit the final report by the end of September 2024 and propose the special law draft by the end of the year, holding a public hearing. The Financial Supervisory Commission plans to submit the special law draft for parliamentary review by June 2025.
This marks the first clear disclosure by the Financial Supervisory Commission of the promotion plan for the Virtual Asset Management Special Law, demonstrating the government’s attention to the virtual asset market. With the gradual formulation and implementation of the special law, the market is expected to welcome a more regulated and secure development environment, further protecting the rights of investors.