Taiwan’s financial watchdog today announced a set of guidelines for virtual asset services providers (VASPs) that places great emphasis on customer protection.

Under the new guidelines, domestic crypto platforms must ensure the separation and custody of companies’ and customers’ assets, establish review standards for virtual asset listing and delisting, and strengthen information disclosure, the Financial Supervisory Commission said in a statement.

The latest guidelines specified that offshore exchanges that seek to operate in Taiwan must register with the FSC.

“Foreign virtual asset platform operators that have not registered under the company laws and have not declared compliance with anti-money laundering regulations to the FSC may not solicit business within Taiwan or target Taiwanese nationals,” the guidelines said. The Block reported last month that Binance, the world’s largest crypto exchange, is applying to get registered in Taiwan for AML compliance.

The FSC also pointed out that crypto platforms are “not allowed to engage in operations involving derivative financial product transactions with virtual assets as underlying assets or virtual asset businesses with securities-like characteristics.”

Previously, Taiwan has required (VASPs) to comply with anti-money laundering laws since the FSC introduced anti-money laundering rules in July 2021.

Self-regulatory rules

Following the official release of the FSC’s guidelines, crypto platforms in Taiwan are expected to form an industry association and come up with self-supervisory rules based on the guidelines.

Currently, nine crypto exchanges in Taiwan have set up a working group in preparation for the establishment of a crypto industry association, aiming to submit an application for an association in mid-October.

The working group currently consists of nine firms, including major exchanges in Taiwan such as MaiCoin, BitoGroup and ACE. Winston Hsiao, XREX’s cofounder and Group CRO, serves as the working group convener, according to the statement.

Wayne Huang, co-founder and Group CEO of Taipei-based crypto exchange XREX, told The Block that 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.”

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

THE SCOOP

Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro