The rise of cryptocurrencies and their broad applicability in international trade and finance have inspired some in Taiwan, most vocally legislator-at-large Jason Hsu, to take a closer look at how they can be integrated into the government's goals of promoting technological innovation and investment. However, differing opinions from legislators, government agencies and industry has meant that while cryptocurrencies have been a hot topic of late, there is still a lack of clear policy direction and no legislation governing these new technologies.
The current legal situation
Cryptocurrencies are considered a "virtual commodity" by the Taiwanese government and are essentially unregulated. The Banking Act and the Securities and Exchange Act, do however provide penalties for issuers who violate articles in either law. In light of this, many issuers abroad have blocked or prevented people in Taiwan purchasing currencies through ICOs to avoid criminal liability. Uncertainty around these issues is seen as a major obstacle in the development of Taiwan's cryptocurrency and wider blockchain industries.
Industry framework
On 22 May 2018, the Taiwan Parliamentary Coalition for Blockchain (TPCB) and the Taiwan Crypto Blockchain Self-Regulatory Organization (TCBSRO) were inaugurated. While the TPCB aims to create bipartisan consensus on the development of a regulatory framework governing blockchain-related activities at the political level, the TCBSRO is composed of blockchain and cryptocurrency industry professionals and community members with a stated goal of ensuring that their activities remain legitimate and lawful in the absence of established regulations.
Subsequently, Taiwan's Financial Services Commission has been tasked with drafting legislation regulating cryptocurrencies, a development it expects to have completed by November 2018. With input from both legislative and executive agencies, this will likely give industry and cryptocurrency-watchers insight into the government's position.
Possible models
So what would regulation in Taiwan look like? Currently, many are looking at some recent examples of similar legislation around the world. These include:
- Wyoming: The northern US state signed the Utility Token Securities Exemption bill into law in March 2018. The law exempts certain cryptocurrencies from money transmission laws, and categorizes them as a new kind of asset, utility tokens, rather than as currency, securities, or commodities.
- Japan: Taiwan's neighbor to the east has been at the forefront of the global blockchain trend, and is currently the world's largest Bitcoin market. Japan's parliament passed its Virtual Currency Act last April, recognized Bitcoin as legal tender, and began requiring new cryptocurrency exchanges to register with the government.
- Singapore: While the Monetary Authority of Singapore (MAS) does not directly monitor the use of cryptocurrencies, it does have regulatory power in cases of money-laundering or the involvement of cryptocurrency in funding terrorism. It has also partnered with R3, an enterprise software firm, on a blockchain-based project aimed at making financial transactions cheaper and more transparent. Singapore is currently considering whether or not to strengthen regulations on cryptocurrencies in order to better protect investors.
Given the conservative stance some countries are taking towards this technology, Taiwan's current willingness to discuss the development and use of cryptocurrencies, and its hope to create blockchain-related regulations in the near future, could make it an important hub of the rapidly evolving digital economy in Asia.
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