Taiwan‘s financial watchdog is set to become the official regulator for digital currencies under upcoming legislation.
Taiwan has adopted a wait-and-see approach toward digital asset regulations for years, despite the rapid growth in Bitcoin adoption over the past few years. However, as Bloomberg reports, the Financial Supervisory Commission (FSC) would hand jurisdiction over the industry before the end of March.
FSC Chairman Huang Tien-mu confirmed the move to legislators on March 20 during a hearing about the banking industry’s stability amid the collapse of three United States banks.
By coming under the FSC’s jurisdiction, digital assets will now be subjected to strict anti-money laundering requirements, the only major initial change. However, Huang dismissed proposals for standalone legislation for the sector, saying it’s too early to debate Bitcoin regulations.
FSC’s oversight won’t cover non-fungible tokens (NFTs), however. According to reports by local media, Huang believes that NFTs are an emerging asset class with broad implications.
Wayne Huang, the founder of Taiwanese blockchain banking platform XREX concurs, saying that the watchdog needs more time to formulate NFT regulations.
“Due to the extendability and composability of NFTs, they can represent a broad spectrum of things ranging from commercial products to commodities to securities. Therefore the FSC likely needs more time to develop a proper set of NFT classification guidelines,” he told one outlet.
Taiwan has recorded a surge in Bitcoin adoption in recent years. In the first half of 2022, trading volumes shot up 30%. This adoption has surged despite the strict anti-Bitcoin stance that mainland China has taken over the years. The East Asian country, which dominates the global semiconductor manufacturing industry, has licensed 24 digital asset exchanges.
The new regulatory structure has been met with a mixed reception. Huang, the XREX founder, welcomed the FSC as the industry watchdog, urging it to partner with industry stakeholders to develop an enabling regulatory framework.
Others like Alex Liu, the CEO of Taiwan’s largest exchange Maicoin, believe that the FSC isn’t best equipped to oversee the sector. He says that the newly-created Ministry of Digital Affairs (MODA) should have been charged with overseeing Bitcoin. This proposal was opposed based on the limited experience of the new ministry, an argument Liu dismissed.
“Militaries use guns and bullets. Let’s say they started using laser guns. Would you expect that to still fall under the defense ministry or a new department of directed energy weapons?” he posed.
As per Bloomberg, Binance is already rallying other local exchanges to pressure the FSC for lenient regulations. In a paper advocating for new laws, Binance argued that other regulators who have attempted to apply existing regulations to digital assets “experienced great difficulty as the rules lacked clarity and made it very confusing for business operators, authorities and customers.”
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