Taiwan officially launches the crypto defense entity with 24 members

The crypto protection body of Taiwan officially begins its activities with twenty-four members. The structure will serve as a link between the private sector and the government for the supervision of the sector. Let’s see all the details below. 

A bridge between the private sector and government for crypto in Taiwan

As anticipated, the Taiwan Virtual Asset Service Provider Association, the cryptocurrency advocacy body of Taiwan, was officially established during an inaugural meeting with 24 entities from the cryptocurrency sector. 

This according to an announcement on X and a blog post from the blockchain company XREX. The association aims to serve as a link between the private sector and the government for the oversight of the cryptocurrency industry.

His first objective will be to develop a codice di autoregolamentazione that covers sector classification, listing and delisting, consumer protection, risk control, transaction monitoring, and advertising, as indicated in the blog post.

The preparations for the creation of the association began in September, when nine entities gathered to initiate the process. 

The Ministry of the Interior of Taiwan approved the formation of the body in accordance with the law in March 2024, and the founding meeting was held on Thursday. 

Titan Cheng, founder and CEO of BitoPro, will be the president, while Winston Hsiao, Chief Revenue Officer of XREX, will be the vice president.

Taiwan has taken measures to introduce legislation to regulate the cryptocurrency sector after the FTX scandal forced it to reconsider its previously relatively disinterested stance.

Taiwan: the cryptocurrency bill at the Legislative Yuan

The bill on the management of virtual assets in Taiwan aims to define digital assets, establish operational standards for asset operators, and ensure consumer protection. 

Furthermore, it aims to impose the registration to industry associations and the necessary regulatory authorizations.

Until now, the country has adopted a fairly relaxed approach towards the sector, regulating only based on existing laws on customer identification and anti-money laundering. 

The regulatory process was accelerated after the collapse of the cryptocurrency exchange FTX last November, due to its popularity among Taiwanese for the advantageous interest rates in US dollars compared to local banks.

Unlike the regulations on cryptocurrencies in Hong Kong, the bill does not decisively address derivatives or stablecoin.

However, it recognizes that derivatives linked to virtual assets have unique characteristics (in particular it mentions perpetual contracts) that might require specific regulation in the future, outside of traditional normative finanziarie.

Furthermore, the bill does not limit the trading of digital assets to professional investors. 

Formal regulatory oversight

Unlike Japan, which requires the mandatory use of custodians for locally licensed exchanges, here it only requires the separation of customer assets from corporate funds, without imposing the explicit use of third-party custodians.

Exchange operators will be required to submit periodic reports to auditors on their business and managed assets. 

Thus allowing regulatory authorities such as the Financial Supervisory Commission (FSC) to conduct regular inspections on their internal control and audit systems.

Even though the current bill does not explicitly mention Proof of Reserves, it indicates that the regulatory authority will establish the standards for asset reporting, after consultation with the industry, with the expectation that authorized exchanges will adhere to them.

The interested parties of the cryptocurrency industry in Taiwan have expressed a positive reception towards this formal regulatory oversight.