Chairman Peng Jinlong presided over the Financial Supervisory Commission’s New Year Press Conference on January 22. When asked about the high registration threshold for virtual currency operators in Taiwan, which has caused many operators to give up, the issue of non-compliant overseas exchanges still operating in Taiwan was also raised.
(FSC: Stablecoin and Bitcoin ETF entrusted trading for retail investors to open after a six-month observation period)
FSC: Only three applications for registration so far
The FSC stated that since the implementation of the registration system, it has started accepting registrations since November 2024. Currently, only three operators have submitted applications, and it is expected that more operators will complete their registrations by the end of March 2025. It also emphasized the need for virtual asset transactions to be conducted in Taiwan. Even for overseas transactions, it hopes to register locally to control the flow of funds and currencies and enhance regulatory capabilities.
Challenges in regulating overseas exchanges remain
As seen in the market, overseas exchanges such as Bybit, Bitget, Binance, and OKEx still attract a large number of Taiwanese investors, especially the younger generation. Even if overseas exchanges cannot meet Taiwan’s regulatory requirements and give up localized operations, there is still a large amount of capital flowing overseas.
Possible actions to take
Regarding the issue of overseas exchanges and capital outflows, the following measures could be considered:
Increase the competitiveness of local exchanges:
Reduce tax and compliance costs to encourage more operators to establish a presence in Taiwan.
Provide tax and regulatory incentives to attract local and international operators.
Strengthen the supervision of overseas exchanges:
Enhance the tracking of fund flows from Taiwanese investors using overseas exchanges.
Restrict access to overseas websites.
Cooperate with international financial institutions to promote information sharing and anti-money laundering actions.
At the same time, educate young Taiwanese investors about the potential risks of overseas exchanges (such as asset security and inadequate regulatory protection), and encourage compliant operators to develop encrypted assets and innovative financial products that meet the needs of young people, and encourage investment in the local financial market.
Peng Jinlong: Transitioning from anti-money laundering to institutional management
FSC Chairman Peng Jinlong stated that the first three stages of virtual currency regulation in Taiwan focused on anti-money laundering, but the fourth stage will focus on institutional management.
The goal of the anti-money laundering stage is mainly to prevent money laundering and illegal fund flows by focusing on “behavior management.”
The registration system serves as an “upgraded version of anti-money laundering” and further requires operators to verify identities and comply with regulations. However, this approach has limitations, as the current regulatory focus is on behavioral norms rather than comprehensive institutional management, and there are no specific regulations regarding the organization size, operational model, and capital requirements for operators.
The fourth stage will introduce special legislation to focus on institutional management, granting virtual asset operators a legal identity similar to insurance companies, banks, or securities firms. It will establish clear conditions, standards, organizational forms, and compliance norms to gradually promote the regularization and stable development of the industry.
This can promote market integration, eliminate non-compliant operators, improve service quality, and establish investor trust, bringing about long-term stability to the market.
International experience referenced in the special legislation
Peng Jinlong stated that the core content of the special legislation includes:
Setting conditions and standards for operators, including requirements for founders, capital requirements, and internal control mechanisms.
Focusing on “institutional supervision” and clarifying the operational norms and responsibilities of Virtual Asset Service Providers (VASPs).
Protecting investor rights and promoting market fairness and transparency.
The formulation of the special legislation draws on the EU’s Markets in Crypto-Assets Regulation (MiCA) and incorporates relevant standards and design concepts. At the same time, it balances the characteristics of the Taiwanese market with international regulatory trends to ensure the global applicability and competitiveness of the special legislation. Public hearings will begin in February to collect opinions from various sectors, and the draft legislation will be completed by June and submitted to the Executive Yuan for review.
Risk Warning
Cryptocurrency investment carries a high level of risk, and prices may fluctuate dramatically, resulting in a total loss of your capital. Please carefully evaluate the risks.