Taiwan’s Financial Supervisory Commission (FSC) is set to initiate a trial for crypto custody services through local banks, as reported by the Central News Agency on October 8. The FSC aims to begin accepting applications for this pilot program in the first quarter of 2025.
So far, three private banks have shown interest in participating in the trial.
Clarification on Managed Cryptos Required
Participating financial institutions will need to specify the types of digital assets they intend to manage, which may include popular cryptocurrencies such as Bitcoin, Ether, and Dogecoin. Additionally, banks must define their target client base, which could range from professional and general investors to crypto platforms and other institutional entities. This requirement ensures that banks have a clear understanding of their market segment.
Hu Zehua, the FSC’s director of the comprehensive planning division, stated that details about the trial will be disclosed at least 15 days prior to the start of the application process. The FSC also plans to collect public feedback to refine the trial.
Strengthening Anti-Money Laundering Regulations
This initiative follows recent updates to Taiwan’s Anti-Money Laundering (AML) regulations, aimed at enhancing oversight of local virtual asset service providers (VASPs). These new rules reinforce the regulatory framework to promote a safer and more transparent crypto market.
In May, Taiwanese authorities announced intentions to penalize cryptocurrency firms that do not comply with AML laws. In response to increasing risks of fraud and money laundering within the virtual asset sector, the Ministry of Justice proposed several amendments to existing AML regulations, suggesting significant fines and prison sentences for non-compliant service providers.
Key amendments include measures targeting fraud prevention, money laundering prevention, technology investigation and security, as well as communication security and oversight. Notably, the revised laws impose stricter registration requirements and limitations on both domestic and international currency dealers.
Taiwan’s Regulatory Push for Crypto
Taiwan is actively seeking to position itself as a global cryptocurrency hub by implementing stringent regulations. The country plans to impose restrictions on offshore cryptocurrency exchanges operating within its jurisdiction unless they secure the necessary registration.
In September of last year, the FSC drafted ten guiding principles for VASPs aimed at establishing self-regulatory frameworks. These principles, expected to be officially released by the end of this month, will focus on various aspects, including enhancing information disclosure, setting review standards for virtual asset listing and delisting, and ensuring the proper separation and custody of company and customer assets. The FSC will also strictly prohibit illegal business solicitation by foreign crypto firms.