The formulation of the Virtual Asset Service Providers (VASP) Special Law finally has a clear process. Financial Supervisory Commission Chairman Peng Jinlong will report to the Finance Committee on the 12th, and is expected to gradually promote the management of virtual asset operators in four stages. It is planned to propose a draft law by the end of 2024 and complete the draft for submission to the Legislature for review by June 2025.
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FSC publicly confirms the special law for the first time
Phase One: Supervising virtual asset operators
Phase Two: Establishing an association and formulating self-discipline regulations
Phase Three: Enhancing anti-money laundering management
Phase Four: Enacting the special law
This is the first time the FSC has publicly disclosed the schedule and plan for establishing the Virtual Asset Management Special Law. The formulation of the special law will refer to international regulatory standards, focusing on six major regulatory priorities including operator licensing conditions, consumer protection, capital requirements, asset management, market trading behavior norms, and business development.
In the first phase, the FSC will start supervising virtual asset service providers (VASPs) on anti-money laundering measures and begin to supervise relevant operators. Currently, 25 operators have completed compliance declarations, including exchanges, trading platforms, physical stores, virtual asset ATMs (BTMs), and custody system providers.
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The second phase will promote the establishment of an association for VASPs and the formulation of self-discipline regulations. The association will formulate self-discipline regulations based on eight guiding principles set by the FSC. It is expected that the VASPs will officially establish the association on Thursday (the 13th).
In the third phase, the FSC will add a VASP registration system to the anti-money laundering law, clearly defining VASPs 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 New Taiwan Dollars. The FSC plans to manage registered VASPs differentially based on the complexity of their business.
VASPs operating in the form of exchanges must adhere to the most comprehensive internal control regulations, including matching trading rules, information system establishment (compliance with ISO27001 information security regulations), wallet management (at least half of which must be cold wallets), and asset separation between platforms and customers.
Among the 25 VASPs that have completed compliance declarations, such as ACE, BitoEX, MaiCoin, XREX, HOYA, all belong to the exchange type and must comply with the complete regulations.
The final stage will move towards the enactment of the special law. The FSC will outsource the study of VASP management law in January 2024, taking into account regulations from various countries and international standards, and determining the six major regulatory priorities. The research team is expected to submit a final report by the end of September 2024 and propose a draft law by the end of the year, holding a public hearing. The FSC plans to submit the draft law to the Legislature for review by June 2025.
The FSC’s clear disclosure of the push for the Virtual Asset Management Special Law for the first time demonstrates the government’s attention to the virtual asset market. With the gradual formulation and implementation of the special law, the market is expected to usher in a more standardized and secure development environment, further protecting the rights of investors.
VASP
Taiwan
Special Law
Peng Jinlong
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