Driven by concerns over activity in offshore markets and avoiding any regulatory arbitrage, Taiwan lawmakers are targeting the end of November to submit a first draft of a special law about offshore exchanges, The Block reported.
What Happened: Yung-Chang Chiang of The Legislative Yuan of Taiwan, said in an interview the plan was to make the first draft available for reading to the parliament by the end of November end or earlier. He added such an act was necessary for the regulation of crypto-related businesses as crypto assets differ from traditional financial products and need to be governed through a special law.
The lawmakers also held a public hearing today in the Taiwanese parliament among virtual asset service providers, legal experts and scholars to discuss the draft proposal.
Taiwan has had virtual asset services providers abide by anti-money laundering laws since the Financial Supervisory Commission (FSC) introduced them in July 2021.
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Also Read: Taiwan Polishes Crypto Regulations, Plans To Ban Non-Compliant Offshore Exchanges
Why It Matters: Taiwan has many crypto platforms operating within the country without declaring AML compliance with the FSC, and if there is no special law in place regulators cannot do much. Officials look to implement the law sometime after the middle of 2024.
Cryptocurrency platforms such as Binance, which has yet to receive regulation in the country, face difficulties getting access to suitable banking services.
Damien Ho, Binance’s global partnerships representative, said, “We also boldly suggest that the Taiwan government should encourage some private or public banks to become more crypto-friendly and handle crypto firms’ relevant business. This can help crypto businesses develop in a more regulated and effective manner.”
Binance has formed a local entity named “Binance International Limited Taiwan Branch (Seychelles),” which was approved in May 2023. It has already applied to get registered in Taiwan for AML compliance.
Regulations In Place: The step comes on the heels of guidelines issued last week by Taiwan’s Financial Supervisory Commission which were for improving cryptocurrency investor protections. The guidelines included rules covering the whole industry, including separating assets in exchanges’ treasury from those of the customer and mechanisms for reviewing the listing and delisting of digital assets.
The rules also stated foreign virtual asset service providers cannot provide services in Taiwan without the necessary approvals from local regulatory authorities. Separately, Taiwan’s major cryptocurrency exchanges formed an association for the betterment of industry interests.
Read Next: India Pivots On Crypto After Reviewing G20 Proposal, Secretary Of Economic Affairs Says
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