Taiwan to Enforce Stricter Rules on Crypto Listings and Compliance in January 2025

Taiwan’s Financial Supervisory Commission (FSC) is stepping up its regulatory game in the crypto sector with a new set of rules set to take effect in January 2025. These changes will require virtual asset service providers (VASPs) to meet strict compliance standards, focusing on anti-money laundering (AML) practices, crypto asset listings, and customer protection.

Taiwan’s New Registration Regulation for Crypto Firms

In a move to increase transparency and accountability, the FSC will soon mandate that all VASPs complete a compliance registration process. According to Hsi-Ho Huang, the director of the securities firms division of the FSC, non-compliance could result in serious penalties, including imprisonment for up to two years. This measure follows Taiwan's AML requirements from 2021 but will be more rigorous, ensuring VASPs operate with full adherence to the FSC’s updated regulations.

Enhanced Scrutiny for Listing and Delisting Crypto Assets

Under the new rules, crypto exchanges will face tighter scrutiny regarding the assets they choose to list and delist. Exchanges must implement transparent procedures for listing and delisting tokens, ensuring fair trading and monitoring for abnormal activity. By enforcing these procedures, the FSC aims to minimize risks related to market manipulation and protect retail investors.

Client Asset Custody Requirements

Another critical component of Taiwan's regulatory shift involves custody of client assets. The FSC will require custodians to keep client funds separate from the trading platforms’ proprietary assets, either by placing them in trust or segregated accounts. Custodians must also conduct annual audits, certified by independent CPAs, to provide transparency and accountability.

Proposed Legislation on Crypto Assets

In addition to the new registration regulation, the FSC is drafting a specialized law to oversee the entire crypto ecosystem in Taiwan. FSC Chair Jin-Lung Peng announced that this law proposal is expected to be submitted to the Executive Yuan, Taiwan's top administrative body, by June 2025. The new law will likely provide the FSC with a comprehensive framework for regulating the crypto industry and enforcing these standards more effectively.

Industry-Led Self-Regulation Efforts

Taiwan’s crypto industry is already taking steps toward self-regulation. In June 2024, local crypto companies formed an industry association to create internal rules based on the FSC’s guidelines. This self-supervisory approach will help firms align with upcoming regulatory changes and foster best practices within the industry.

Conclusion

Taiwan’s upcoming crypto regulations mark a significant shift in how the government will oversee digital assets. With enhanced scrutiny on AML compliance, asset custody, and listing standards, the FSC aims to strengthen investor protections while fostering a safer environment for crypto activities. As the new rules roll out in January 2025, Taiwan is setting a new standard for crypto oversight that may inspire similar approaches in other regions.