In an endeavor to bolster security for cryptocurrency users, the Financial Supervisory Commission (FSC) of Taiwan recently introduced fresh directives tailored for Virtual Asset Service Providers (VASPs). Long since March, the FSC has been vocal on adhering to stringent regulation of the cryptocurrency exchange sector to protect users within Taiwan. To stiffen its anti-money laundering regulations, all crypto exchanges in Taiwan are mandated to comply.
In an eye-catching twist, the newly released guidelines demand a clear separation and rigorous safeguarding of company treasury assets from customer assets for all cryptocurrency exchanges. This entails a revamped review standard for the listing and delisting of digital assets while increasing transparency in information disclosure. The guidelines echo the need for secure asset custody practices and the fortification of internal controls and management within crypto firms.
Interestingly, for foreign crypto firms looking to break into the Taiwanese market, registration with the regulator is a non-negotiable mandate, underlining its insistence on robust anti-money laundering mechanisms. Introduced back in July 2021, these regulations have provided the backbone for stricter adherence to anti-money laundering policies.
This regulatory move extends to invitations to Virtual Asset Service Providers with an aim to encourage self-regulation within the crypto industry. Pacified by the new guidelines, leading crypto exchanges in Taiwan have initiated the formation of a self-regulatory body. The working assembly comprises nine Taiwan-based crypto exchanges currently framing self-regulatory norms set to be completed by mid-October.
In the words of Wayne Huang, co-founder and Group CEO of Taipei-based crypto exchange XREX, “The FSC’s new guidelines could give birth to a new industry, providing this new industry legitimacy, oversight, a solid path to grow, and an accelerated means to acquire public trust.”
Following the 2022 market crash and a worrying revelation that customer funds had been mishandled at the now insolvent FTX crypto exchange, regulation of the global cryptocurrency market has gone up a notch. With this regulatory update, the FSC has taken a page from similar frameworks in the European Union, Japan, and South Korea.
With its main target being the unregistered cryptocurrency exchanges, the FSC’s framework serves to reinforce control of cryptocurrencies in the country before it assumed the role of the principal regulator in 2023.
Recently, news broke that the world’s largest crypto exchange Binance, among other major contenders such as Kraken and Bybit, had knocked at Taiwan regulator’s doors seeking compliance with Anti-Money Laundering (AML) legislation. An advancement that highlights the growing acceptance of regulatory oversight in the increasingly mainstream cryptocurrency industry.
Source: Cryptonews
