Binance is applying to get registered in Taiwan for AML compliance: sources

Binance, the world’s largest cryptocurrency exchange, is applying to get registered under Taiwan’s Money Laundering Control Act, currently the only crypto-related regulations local authorities have produced.

At a closed-door meeting on Tuesday, Taiwan’s Financial Supervisory Commission (FSC) told the dozens of domestic crypto service providers in attendance that Binance is applying to get registered for anti-money laundering compliance, two sources familiar with the matter said.

Taiwan has required virtual assets services providers (VASPs) to comply with its anti-money laundering laws since the FSC introduced anti-money laundering rules in July 2021. Otherwise, the industry remains largely unregulated in the country. 

Binance did not immediately respond to The Block’s request for comment.

In a Friday phone call with The Block, an FSC official declined to comment on whether Binance had submitted documentation to register with the regulator, but said it urges offshore crypto platforms that operate in Taiwan to comply with local AML rules.

While Binance is not regulated in Taiwan, the exchange has formed a local entity named, “Binance International Limited Taiwan Branch (Seychelles),” according to the Department of Commerce’s database. The registration information showed that the government approved Binance’s company registration on May 12, 2023, with a registered capital of NT$30 million ($944,000) in Taiwan.

Binance presence

Binance has already partnered with local law enforcement agencies to combat cybercrime in Taiwan. In June, Binance said it collaborated with Taiwan’s Criminal Investigation Bureau to share its expertise in tackling digital asset-related crime with more than 200 Taiwanese law enforcement officers.

“As a growing number of people in Taiwan grow an interest in cryptocurrency, it is important that the crypto ecosystem feels safe and comfortable for users,” Damien Ho, head of global partnerships of Binance, said in the June blog post.

Binance has been actively expanding in Asia. Earlier this month, Binance officially launched in Japan after it acquired local exchange Sakura Exchange BitCoin in November 2022 — paving the way for it to be regulated by the Japan Financial Services Agency.

Upcoming guidelines

Taiwan’s FSC, which was only appointed in March as the main regulator overseeing the crypto industry, is currently formulating a broader set of guidelines on trading and payments related to cryptocurrencies for VASPs, the regulator said.

The FSC told The Block that the agency plans to publish the VASP guidelines by the end of September.

Kevin Cheng, a director of the Taiwan Fintech Association, said the FSC intends to take a strict approach to regulating crypto platforms operating in Taiwan similar to how it regulates traditional financial institutions.

“The FSC plans to require VASPs to keep their own crypto assets separate from the clients’ crypto assets and to have accounting firms audit such assets every year,” said Cheng, who formerly served as a chief compliance officer at BitoEX, a major crypto exchange in Taiwan.

He added that such a rule — if put in place — would be difficult to comply with as most accounting firms would be hesitant to take on crypto clients. 

“It’s not so much about accounting or auditing techniques but more about crypto-related information skills,” Cheng continued.

Claire Chen, chief executive officer of BitShine, a crypto trading startup in Taiwan, said that the FSC may have to work with the CPA association to find a way to properly audit crypto platforms.

Proposed new crypto regulatory division

In an attempt to further step up supervision of the crypto industry, a number of lawmakers in Taiwan in April proposed a law amendment to set up a new bureau within the FSC to specifically tackle crypto-related matters, local media Economic Daily News reported.

The amendment was processed in April for the first reading but it will need to go through second and third readings to come into force. If passed, the new bureau will add to the FSC's existing four bureaus overseeing banking, securities and futures, insurance and auditing.

Previously in July 2022, the FSC asked banks and credit card companies not to allow credit cards as a payment method for virtual asset services.