Taiwan’s Financial Supervisory Commission to Initiate Institutional Trial for Cryptocurrency Custody Solutions

Taiwan’s Financial Supervisory Commission (FSC) is set to initiate a trial for cryptocurrency custody services via local banks.

According to a report from the Central News Agency on October 8, the FSC aims to start accepting applications for this trial in the first quarter of 2025.

Three private banks have already shown interest in taking part in this pilot initiative.

Banks Must Specify Cryptocurrencies They Aim to Manage

Financial institutions wishing to participate in the trial will be required to identify the types of assets they intend to manage, including well-known cryptocurrencies such as Bitcoin, Ether, and Dogecoin.

Furthermore, banks must define their target clientele, which may include professional or general investors, cryptocurrency platforms, or other institutional entities.

This strategy ensures that banks possess a clear understanding of the market segment they seek to address.

Hu Zehua, the FSC’s director of the comprehensive planning division, informed the outlet that information regarding the trial will be disclosed at least 15 days prior to the commencement of the application process.

The FSC also plans to collect public input and integrate suggestions to enhance the trial process.

Taiwan to Trial Crypto Custody Services in 2025
Taiwan’s Financial Supervisory Commission will start collecting applications for crypto custody services in Q1 2025, with interest from three local banks. pic.twitter.com/CovKd3ZtkY

— mracrypto (@MRA_crypto) October 9, 2024

This initiative follows the recent updates to Anti-Money Laundering (AML) regulations introduced by Taiwan’s FSC.

The new regulations aim to enhance oversight of local virtual asset service providers (VASPs), strengthening the regulatory framework to foster a safer and more transparent cryptocurrency market.

In May, Taiwanese authorities announced their intention to penalize cryptocurrency firms that do not comply with its AML regulations.

In light of fraud and money laundering threats in the virtual asset sector, Taiwan’s Ministry of Justice proposed several amendments to the existing AML laws, suggesting significant fines and imprisonment for non-compliant service providers.

Key elements of the proposed amendments include regulations focused on fraud prevention, money laundering prevention, technological investigation and security, as well as communications security and oversight.

Importantly, a significant change in the new money laundering prevention law aimed at VASPs introduces stricter penalties for noncompliance.

The revised law establishes more rigorous registration requirements and restrictions for both domestic and international currency dealers.

Taiwan Advocates for Crypto Regulations

Taiwan has been advocating for cryptocurrency regulations as part of its efforts to position itself as a global cryptocurrency hub.

The nation is poised to impose restrictions on offshore cryptocurrency exchanges operating within its jurisdiction unless they obtain the necessary registration.

In September of the previous year, the FSC drafted ten guiding principles for VASPs to create self-regulatory frameworks.

The guiding principles, which are anticipated to be officially released by the end of this month, will address various aspects.

Specifically, the guidelines are expected to enhance information disclosure, establish review criteria for virtual asset listing and delisting, and ensure the segregation and custody of both companies’ and customers’ assets.

The FSC intends to firmly prohibit illegal business solicitation by foreign cryptocurrency firms.

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