Taiwan’s Financial Supervisory Commission (FSC) has introduced new regulations aimed at tightening Anti-Money Laundering (AML) controls for virtual asset service providers (VASPs). Set to take effect in January 2025, the updated rules mark a significant shift in how Taiwan regulates its growing crypto industry. Taiwan’s New Crypto Regulation Aims to Strengthen AML Compliance for Virtual Asset Providers. Companies must register with the government and meet stricter compliance standards or face steep penalties.
Overview of Taiwan’s New Crypto Regulation
The new regulation unveiled by Taiwan’s FSC responds to the rapid growth of the digital asset market. Effective January 2025, all crypto-related businesses in Taiwan will be required to register with the government by September 2025. Entities that fail to comply could face fines of up to 5 million New Taiwan dollars (about $155,900) or prison sentences of up to two years.
The FSC has emphasized strengthening the country’s AML framework to align with international standards. While Taiwan has had AML measures in place since 2021, Taiwan’s New Crypto Regulation Aims to Strengthen AML Compliance for Virtual Asset Providers by updating regulations to close gaps and enhance crypto business oversight.
Key Changes for Virtual Asset Service Providers (VASPs)
Under the new regulation, VASPs in Taiwan must adhere to stricter compliance rules. Companies that have previously complied with the existing framework must re-register with the FSC. This move reflects the FSC’s intention to enforce higher levels of transparency across the industry.
Additionally, the FSC has advised VASPs to submit annual risk assessments as part of their compliance obligations. Taiwan’s New Crypto Regulation Aims to Strengthen AML Compliance for Virtual Asset Providers. The FSC encourages firms to wait for the official registration system before submitting documents to avoid issues with reapplication under updated rules.
Looking Ahead: Taiwan’s Broader Crypto Strategy
The new crypto regulation is part of Taiwan’s larger plan to enhance its digital asset regulatory framework. The FSC is expected to propose additional crypto-related laws by mid-2025, with drafts expected by late 2024. These new laws aim to ensure further the security and transparency of Taiwan’s growing crypto market.
Despite the stricter AML measures, Taiwan’s FSC has also shown some flexibility in other areas of crypto regulation. For example, professional investors in Taiwan are now allowed to engage with exchange-traded funds (ETFs) linked to virtual assets, opening up new investment opportunities for institutions and high-net-worth individuals.
FSC’s Move to Approve Virtual Asset ETFs
In a recent decision, the FSC greenlighted using virtual asset ETFs for professional investors. While these financial products come with higher risks, the regulator has limited their availability to institutional investors, qualified individuals, and high-net-worth clients.
The FSC implemented several provisions to protect investors, including suitability assessments and mandatory risk warnings for non-institutional clients. These steps ensure that only knowledgeable and prepared investors engage with these high-risk products.
Conclusion: Taiwan’s Crypto Regulatory Evolution
Taiwan’s New Crypto Regulation Aims to Strengthen AML Compliance for Virtual Asset Providers. Taiwan’s new crypto regulation marks a critical step in its effort to regulate digital assets more effectively. As the island strengthens its AML framework for VASPs, it continues developing a balanced approach to crypto regulation, ensuring compliance and innovation. The FSC’s upcoming proposals will likely shape the future of Taiwan’s crypto landscape, helping position it as a leader in Asia’s evolving digital finance sector.
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