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Taiwan

Retail_Trading_Status

Allowed-Regulated Unknown
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Analysis ID
#43
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Archived
Created
2025-04-12 06:39
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Live

Executive Summary

Retail cryptocurrency trading is allowed and regulated in Taiwan, primarily overseen by the Financial Supervisory Commission (FSC). Key regulatory actions include bringing Virtual Asset Service Providers (VASPs) under the Money Laundering Control Act (MLCA) and implementing AML/CFT regulations. VASPs must register with the FSC and comply with KYC/CDD requirements. Taiwan is also considering dedicated cryptocurrency legislation for broader regulation beyond AML/CFT.

Key Pillars

The primary regulator is the Financial Supervisory Commission (FSC). Core compliance requirements include Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) procedures, Know-Your-Customer (KYC) or Customer Due Diligence (CDD) checks, and transaction monitoring. VASPs must register with the FSC, with a formal AML registration system effective November 30, 2024.

Landmark Laws

Money Laundering Control Act (MLCA) - Amended July 2024: Brought Virtual Asset Service Providers (VASPs) under its scope to combat money laundering and terrorism financing. Executive Yuan Ruling - April 7, 2021: Interpreted the scope of enterprises of “virtual currency platforms and trading business” under the Taiwan AML Act. Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises of Virtual Currency Platforms and Trading Business (Crypto AML Regulations) - Mandates AML/CFT procedures for VASPs. Guidelines for the Administration of Virtual Asset Service Providers (VASP Guidelines) - Issued September 2023: Focuses on consumer protection and market integrity, covering areas like virtual asset listing/delisting and asset segregation. VASP Registration Regulations - Effective Nov 30, 2024: Requires VASPs to complete AML registration before providing regulated virtual asset services.

Considerations

Cryptocurrencies are viewed as "virtual commodities" rather than currency. Risks and warnings about speculation have been consistently issued by the FSC and CBC. The implementation of AML regulations addresses money laundering and terrorism financing risks.

Notes

In 2013, the FSC and CBC initially viewed cryptocurrencies as speculative "virtual commodities." Taiwan is considering dedicated cryptocurrency legislation with potential drafts emerging in 2025. Offshore VASPs must establish a local company or branch and complete AML registration. The FSC is encouraging the formation of a VASP self-regulatory organization (SRO). Violations of VASP registration regulations may result in individuals facing imprisonment of up to two years and/or fines of up to NT$5 million.

Detailed Explanation

In Taiwan, retail cryptocurrency trading is legally permitted but regulated. The Financial Supervisory Commission (FSC) is the primary regulator. Initially, in 2013, the FSC and Taiwan's Central Bank (CBC) considered cryptocurrencies as highly speculative "virtual commodities" rather than currency. While outright bans on ownership and trading were not implemented, restrictions were placed on using Bitcoin at ATMs and funding crypto purchases with credit cards. A key regulatory development occurred in July 2021 when Virtual Asset Service Providers (VASPs) were brought under the scope of the Money Laundering Control Act (MLCA), formalized by an Executive Yuan ruling in April 2021, and followed by the FSC's "Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises of Virtual Currency Platforms and Trading Business" (Crypto AML Regulations). These regulations mandate that VASPs register with the FSC, implement AML/CFT procedures, conduct KYC/CDD checks, monitor transactions, and establish internal control mechanisms. The FSC issued the "Guidelines for the Administration of Virtual Asset Service Providers" (VASP Guidelines) in September 2023, focusing on consumer protection and market integrity. These guidelines cover virtual asset listing/delisting, asset segregation, information disclosure, and internal controls. Recent amendments to the MLCA (July 2024) and the introduction of VASP Registration Regulations (effective Nov 30, 2024) further strengthen oversight, requiring offshore VASPs serving Taiwanese customers to establish a local presence and complete AML registration, with non-compliance leading to potential imprisonment and fines. The FSC is encouraging the formation of a VASP self-regulatory organization (SRO). Dedicated legislation specifically for cryptocurrencies is under consideration, with potential drafts emerging in 2025 to provide a comprehensive regulatory structure covering licensing, investor protection, and market conduct beyond just AML/CFT. Since November 30, 2024, Taiwan has implemented VASP registration regulations, prohibiting VASPs from providing regulated virtual asset services before completing AML registration, and violations may result in individuals facing imprisonment of up to two years and/or fines of up to NT$5 million.

Summary Points

Here's a bullet-point summary of the Retail Cryptocurrency Trading Status in Taiwan, based on the provided report:

I. Overall Regulatory Status:

  • Allowed-Regulated: Retail cryptocurrency trading is permitted in Taiwan but operates under a developing regulatory framework.

II. Key Regulatory Bodies and Roles:

  • Financial Supervisory Commission (FSC):
    • Primary regulator overseeing Virtual Asset Service Providers (VASPs).
    • Enforces Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations.
    • Issues guidelines for VASP operations, including consumer protection and market integrity.
    • Encouraging the formation of a VASP self-regulatory organization (SRO).
  • Central Bank of the Republic of China (Taiwan) (CBC):
    • Initially viewed cryptocurrencies as speculative "virtual commodities," not currency.
    • Issues warnings about the risks associated with cryptocurrencies.
  • Executive Yuan:
    • Issued ruling in April 2021 defining the scope of "virtual currency platforms and trading business" under the Money Laundering Control Act (MLCA).

III. Important Legislation and Regulations:

  • Money Laundering Control Act (MLCA):
    • Brought VASPs under its scope in July 2021.
    • Recent amendments (July 2024) further strengthen oversight.
  • Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises of Virtual Currency Platforms and Trading Business (Crypto AML Regulations):
    • Issued by the FSC.
    • Mandates AML/CFT procedures for VASPs.
  • VASP Registration Regulations (Effective November 30, 2024):
    • Requires VASPs to register with the FSC for AML compliance.
    • Prohibits VASPs from providing regulated virtual asset services before completing AML registration.
  • Guidelines for the Administration of Virtual Asset Service Providers (VASP Guidelines) (September 2023):
    • Issued by the FSC.
    • Focuses on broader consumer protection and market integrity.

IV. Requirements for Compliance (VASPs):

  • Registration with the FSC: Formal AML registration system effective November 30, 2024.
  • AML/CFT Procedures: Implement robust AML and CFT programs.
  • Know-Your-Customer (KYC) / Customer Due Diligence (CDD): Conduct KYC/CDD checks on customers.
  • Transaction Monitoring: Monitor transactions and report suspicious activities.
  • Internal Controls and Audit Mechanisms: Establish internal control and audit procedures.
  • Segregation of Assets: Segregation and safeguarding of customer versus platform assets.
  • Information Disclosure and Transparency: Provide clear and transparent information to customers.

V. Notable Restrictions or Limitations:

  • Restrictions on Specific Activities (Historical):
    • Restrictions on using Bitcoin at bank ATMs.
    • Restrictions on funding crypto purchases with credit cards.
  • Offshore VASP Requirements:
    • Offshore VASPs serving Taiwanese customers must establish a local company or branch.
    • Must complete AML registration before commencing operations.
  • Penalties for Non-Compliance:
    • Imprisonment (up to two years) and/or fines (up to NT$5 million) for violations of AML regulations.

VI. Recent Developments or Changes:

  • Implementation of VASP Registration Regulations (Nov 2024): VASPs must register with the FSC.
  • Issuance of VASP Guidelines (Sept 2023): Broader regulatory oversight focusing on consumer protection and market integrity.
  • Amendments to the MLCA (July 2024): Further strengthened AML oversight.
  • Consideration of Dedicated Cryptocurrency Legislation:
    • Taiwan is considering dedicated legislation for cryptocurrencies.
    • Drafts potentially emerging in 2025.
    • Aims to provide a more comprehensive regulatory structure covering licensing, investor protection, and market conduct.

Full Analysis Report

Report: Retail Cryptocurrency Trading Status in Taiwan

1. Retail_Trading_Status:

Allowed-Regulated

2. Narrative Explanation:

Individual citizens and residents in Taiwan are legally permitted to buy, sell, and hold cryptocurrencies. The activity is not banned, but it operates within an evolving regulatory framework primarily overseen by the Financial Supervisory Commission (FSC).

Historically, the FSC and Taiwan's Central Bank (CBC) initially viewed cryptocurrencies like Bitcoin not as currency, but as highly speculative "virtual commodities" (Joint Press Release, 2013). While warnings about risks have been consistently issued, and certain activities like using Bitcoin at bank ATMs or funding crypto purchases with credit cards were restricted, outright ownership and trading by individuals has remained permissible.

The key regulatory development occurred in July 2021, when Taiwan brought Virtual Asset Service Providers (VASPs) – entities facilitating crypto transactions like exchanges – under the scope of its Money Laundering Control Act (MLCA). This was formalized through an Executive Yuan ruling in April 2021 and subsequent "Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises of Virtual Currency Platforms and Trading Business" (Crypto AML Regulations) issued by the FSC.

These regulations mandate that VASPs operating in Taiwan must:
* Register with the FSC (initially through an AML compliance statement, now transitioning to a formal AML registration system effective November 30, 2024).
* Implement robust Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) procedures.
* Conduct Know-Your-Customer (KYC) or Customer Due Diligence (CDD) checks.
* Monitor transactions and report suspicious activities.
* Establish internal control and audit mechanisms.

Recent amendments to the MLCA (July 2024) and the introduction of VASP Registration Regulations (effective Nov 30, 2024) further strengthen oversight. Offshore VASPs seeking to serve Taiwanese customers must now establish a local company or branch and complete the AML registration. Failure to comply carries significant penalties, including potential imprisonment and substantial fines.

In September 2023, the FSC issued the "Guidelines for the Administration of Virtual Asset Service Providers" (VASP Guidelines). While issued under the AML framework, these guidelines signal a move towards broader consumer protection and market integrity, covering areas like:
* Review mechanisms for listing/delisting virtual assets.
* Segregation and safeguarding of customer versus platform assets.
* Information disclosure and transparency.
* Internal controls and operational procedures.

The FSC is also encouraging the formation of a VASP self-regulatory organization (SRO) to develop industry standards. Furthermore, Taiwan is actively considering dedicated legislation specifically for cryptocurrencies, with drafts potentially emerging in 2025, aiming to provide a more comprehensive regulatory structure covering licensing, investor protection, and market conduct beyond just AML/CFT.

Therefore, while retail trading is allowed, it occurs within a regulated environment focused primarily on AML/CFT compliance for service providers, with increasing attention being paid to broader investor protection and market integrity measures.

3. Supporting Excerpts:

  • On Legality and Initial Stance: "Cryptocurrencies, which are not linked or tied to the currency of any nation, are currently not accepted by the Central Bank of the Republic of China (Taiwan) (“CBC”) as currency. On 30 December 2013, both the CBC and Taiwan's Financial Supervisory Commission (“FSC”) first expressed the government's position toward Bitcoin by issuing a joint press release... the two authorities held that Bitcoin should not be considered a “currency”, but a highly speculative digital “virtual commodity”." (Source: Global Legal Insights, 2024-10-25)
  • On AML Regulation Implementation: "As for AML, the Money Laundering Control Act of Taiwan (“Taiwan AML Act”) has brought cryptocurrency platform operators into the AML regulatory regime... On 7 April 2021, Taiwan's Executive Yuan issued a ruling (“AML Ruling”), interpreting the scope of enterprises of “virtual currency platforms and trading business” under the Taiwan AML Act... After the AML Ruling was issued, the FSC further published the Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises of Virtual Currency Platforms and Trading Business (“Crypto AML Regulations”)." (Source: Global Legal Insights, 2024-10-25)
  • On VASP Requirements: "According to the Crypto AML Regulations, operators providing such services are required to establish, among others, an internal control and audit mechanism, a reporting procedure of suspicious transactions, and the know-your-customer procedure, etc. Additionally, operators must submit a “compliance declaration” to the FSC..." (Source: Global Legal Insights, 2024-10-25) [Note: This declaration is being superseded by the new registration system].
  • On New Registration Requirements (Nov 2024): "Since November 30, 2024, Taiwan has implemented VASP registration regulations. VASPs are prohibited from providing regulated virtual asset services before completing AML registration. Violations may result in individuals facing imprisonment of up to two years and/or fines of up to NT$5 million..." (Source: Lee Tsai & Partners via Lexology, 2025-02-06)
  • On Offshore VASP Requirements: "The new requirements state that all “virtual asset service providers” operating in Taiwan must establish a local company or branch office under the island's Company Act and complete AML registration before commencing operations." (Source: Finance Magnates, 2024-11-29)
  • On Broader VASP Guidelines (Sept 2023): "In September 2023, the Financial Supervisory Commission (“FSC”) issued the Guidelines for the Administration of Virtual Asset Service Providers (“VASP Guidelines”), reflecting its intent to broaden regulatory oversight of VASPs. Key focus areas included mechanisms for the issuance, listing, and delisting of virtual assets, safeguarding customer assets, and establishing comprehensive internal rules." (Source: Lee Tsai & Partners via Lexology, 2025-02-06)
  • On Future Legislation: "Furthermore, the FSC is considering the possibility of introducing a specific law for cryptocurrencies, with a potential report on feasibility study expected to be announced around the end of 2024 and the draft law around June or July of 2025." (Source: Global Legal Insights, 2024-10-25) [More recent reports suggest a draft might appear earlier in 2025].

4. Source URLs:

  • Global Legal Insights - Blockchain & Cryptocurrency Laws & Regulations 2025 | Taiwan:
    https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations/taiwan (Provides comprehensive overview including historical context and AML rules)
  • Lee Tsai & Partners via Lexology - Overview of Taiwan's Regulatory Measures for Virtual Asset Service Providers:
    https://www.lexology.com/library/detail.aspx?g=e8b5b067-a729-433a-9784-19897c0a8585 (Details evolution of VASP regulation, including 2023 Guidelines and Nov 2024 Registration)
  • Finance Magnates - Taiwan’s AML Rules Covering Crypto Firms to Take Effect Tomorrow:
    https://www.financemagnates.com/cryptocurrency/regulation/taiwans-aml-rules-covering-crypto-firms-to-take-effect-tomorrow/ (Reports on the implementation date and requirements of the new AML registration)
  • The Block - Taiwan fast-tracks stricter crypto AML rules to take effect Nov. 30:
    https://www.theblock.co/post/334194/taiwan-fast-tracks-stricter-crypto-aml-rules-to-take-effect-nov-30 (Confirms accelerated implementation and scope of new AML rules)
  • Law Over Borders (Global Legal Post) - Taiwan - Cryptoassets:
    https://www.globallegalpost.com/law-over-borders/comparative-guides/taiwan-cryptoassets-1463103/ (Discusses Crypto AML Regulations and VASP Guidelines)
  • Financial Supervisory Commission (FSC), R.O.C. (Taiwan) - Official Website (Primary Source):
    https://www.fsc.gov.tw/en/ (Official announcements and regulations are published here, though direct links to specific crypto documents may require navigation)
  • Central Bank of the Republic of China (Taiwan) - Official Website (Primary Source):
    https://www.cbc.gov.tw/en/mp-2.html (Source for official statements and warnings regarding cryptocurrencies)

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