The Financial Supervisory Commission (FSC) in Taiwan has issued new anti-money laundering (AML) regulations for virtual asset service providers (VASPs), including stringent registration conditions and severe sanctions for violations. The new regulations are part of measures to enhance the supervision of the rapidly developing virtual asset sector.
New Compliance Framework for Crypto Firms
In the new regulation, all VASPs in Taiwan are required to apply for AML registration with the FSC no later than September 2025. The rules will be implemented starting January 1, 2025. Any firm that does not comply with the registration requirements will face severe consequences.
Some include a fine of up to NT$5 million (approximately $155,900) and imprisonment for up to two years. The FSC stated that all VASPs, including those complying with prior regulations, must register under the new regime.
The FSC’s proposed rules for VASPs in Taiwan apply to virtual asset exchanges, trading platforms, custodians, and transfer providers. The new measures include categorizing Virtual Asset Service Providers (VASPs) into specific business categories.
Each category must undergo a separate registration process within nine months of the rules coming into force.
Stricter Obligations and Internal Controls
In addition to registration, the FSC’s new measures to prevent money laundering and terrorism financing impose new requirements on VASPs. Such firms must submit an annual risk assessment report to the Virtual Currency Business Association. The regulations also mandate VASPs to implement sufficient measures. Internal control and audit systems to meet the AML standards are included in the rules.
The draft also contains elaborate provisions regarding protecting customers’ assets, transaction safety, and information technology. Virtual asset custodians must separate customer and company funds to protect users’ funds.
Furthermore, VASPs must put wallet mechanisms in place and promote the safety of their information technology. Subsequently, the FSC will collaborate with the Taiwan Virtual Asset Service Provider Association to assist companies in meeting these new responsibilities.
Transitional Period and Penalties for Non-Compliance
The FSC has given a grace period to companies already dealing with virtual asset services. Those who have filed the compliance statement under the previous policies must register under the new framework.
The provided timeframe for this is three months of implementing the new rules. If the companies fail to adhere to these new standards, they could face imprisonment.
Lawyers have praised the FSC for tightening the rules. According to them, this will engender more trust and stability for virtual asset companies operating in Taiwan. Kevin Cheng, secretary general of the Taiwan Fintech Association, stated that the new rules will enhance the threshold for market participation and business. He said,
“We believe that these regulations will help to bring the virtual asset industry closer to the model used for licensed financial institutions.”
Prospects for Taiwan’s Crypto Regulation
The recent moves by the FSC indicate the agency’s intention to strengthen the regulatory environment for virtual assets in Taiwan. Furhter, the Commission aims to finish a preliminary preparation and provide a draft proposal on Crypto law to the Executive Yuan before June 2025.
This may present the industry with a better and more certain legal framework. Industry insiders believe the new rules will allow Taiwan to lure large-scale and institutional funds.
Through enhancing the regulation, the FSC endeavours to continue enhancing the sustainable and stable development of the crypto market in Taiwan.
The FSC has also recognized that the public has a part to play in the specifications of these regulations. In conformance with the principles of openness and consultation, the Commission shall process the draft measures and allow any interested party to provide input into the measures.
