Players in Taiwan’s digital currency ecosystem are bracing for incoming legislation that could have far-reaching consequences on their operations.
In an interview with one news outlet, Yung-Chang Chiang, a member of the Legislative Yuan, disclosed plans to introduce a new rule book to regulate the activities of digital currency service providers. The lawmaker stated that a draft version of the regulation will be submitted for deliberation by the legislature before the end of November.
Chiang’s comments come on the heels of a conversation with representatives of service providers, academia, and other industry stakeholders over the direction of the proposed rules. According to Chiang, a new framework is required to ensure investors’ safety, given the stark differences between digital currencies and traditional financial assets.
Initial probes into the contents of the draft reveal plans to ensure that both local and foreign exchanges seek registration before offering their services to Taiwanese residents. A key feature of the incoming rules is a provision empowering regulatory authorities to impose stiff penalties against erring firms.
“Without such a special law, the regulators would lack the ability to impose penalties,” Chiang said.
Taiwanese authorities aim to crack down on regulatory arbitrage and digital currency crime through the “special law.” Exchanges are also expected to prevent a commingling of customers’ funds with their proprietary assets. It remains to be seen if Taiwan will create a new regulatory body to oversee industry activities.
Ahead of the release of the first draft, stakeholders have begun offering suggestions over the direction of regulation. Winston Hsiao, co-founder of XREX, stated that industry regulation is necessary, but a measured approach should be adopted to avoid large-scale disruptions to operations.
“If we must discuss the special law at this stage, we hope that the law could regulate crypto platforms by their sizes,” Hsiao stated.
The co-founder suggested that large, international exchanges may be regulated through the unique law, but smaller businesses should be regulated by “self-supervisory rules” by an industry association.
Industry players form association
In September, three Taiwanese industry players joined to launch an association to advance the ecosystem’s interests. The move has been construed as a response to the plot by the government to establish a new regulatory framework.
The initial trio includes Maicon Group, BitoGroup, and Ace Exchange, with analysts expecting up to a dozen entities to bolster the association’s ranks. In the days following the group’s launch, six entities joined ranks with the pioneering trio to push for the right to self-regulate.
“The association is a family and a beacon. It guides us in the direction, collects information, sets standards, builds consensus, speaks on our behalf, and leads us to further progress,” a statement read.
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