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Taiwan’s top financial regulator is set to become the primary oversight body to monitor the local crypto industry to ensure local firms follow the anti-money laundering legislation.
The initiative from Taiwan’s securities watchdog to oversee the local crypto sector marks the first of East Asia’s monitoring body to enforce crypto firms to follow AML laws. FSC (Financial Supervisory Commission) chairman, Huang Tien-mu stated in parliament on Monday that initially only crypto payments and transfers will fall under the agency’s ambit.
The FSC regulates security markets, alongside banking and insurance. One key rule for crypto for the time being is that all local firms must comply with anti-money laundering laws to keep all transactions safe. Huang stated that it’s too early to debate creating separate legislation, especially for crypto. The details on self-regulation and other aspects of the crypto sector within government departments remain a mystery, as no further information has been provided.
The official appointment of the FSC is expected to arrive by the end of March 2023, cited Bloomberg’s official, who is familiar with the matter. The NFTs (Non-Fungible Tokens) don’t fall under the FSC’s purview and could instead be given to other departments, such as the IT-Focused Digital Affairs Ministry; the central bank can watch for Stablecoin usage.
Whilst the crypto industry has been outright banned in mainland China since 2021, Taiwan has instead launched new AML laws for the crypto service providers and platforms in July 2021. One year later, around 24 new crypto companies including MaiCoin, XREX, and BitoPro were registered under Taiwan’s money laundering and control act.
In H1 2022, Taiwan’s crypto trading volumes went up by more than 30%. MaiCoin, the biggest crypto exchange operating in Taiwan, experienced over $20 million of daily trading volume (as per CoinGecko, Coinbase currently processes about $2 billion per day for scale).
Taiwan is making decisions on regulating crypto formally after a rough year for digital currencies, earmarked by FTX collapse and bankruptcy in November 2022, when it failed to handle the amount of $8 billion influx of user withdrawals.
Regulators worldwide have called for more scrutiny of crypto exchange platforms and have warned investors of all the risks associated with digital assets. The securities watchdog banned digital assets for transactions via credit cards in July, asking the financial sector to not allow merchant status to crypto service providers.