November 29, 2024
By Joe Pan
In a move that brings Taiwan’s cryptocurrency regulations in line with other jurisdictions in the region, the Securities and Futures Bureau (SFB) of Taiwan’s Financial Supervisory Commission has officially opened applications for Virtual Asset Service Provider (VASP) registration. The announcement on November 26, 2024, marks a crucial step in implementing the country’s new anti-money laundering (AML) regulations for the crypto sector.
The SFB website page listing the guidelines with steps and application forms was updated on November 27, attracting over 46,000 views within 24 hours, indicating high interest from both domestic and overseas industry operators.
Key Points of the Announcement
Legal Framework
The amended Money Laundering Control Act, Article 6, which was promulgated on July 31, 2024, will come into effect on November 30, 2024. This law mandates that businesses or individuals providing virtual asset services must complete AML registration with the central competent authority before offering their services.
Kevin Cheng, a compliance specialist and VASP regulation-focused lawyer at the law firm of Lee, Tsai & Partners, explains that Taiwan’s approach is unique in the region. “Taiwan is directly using AML regulations to allow VESPs to obtain licenses, so the license is under the AML legislation, which is quite distinctive,” Cheng notes. This approach differs from other jurisdictions where VASP regulations and AML requirements are often separate.
Requirements for Foreign Operators
Notably, foreign-established VASPs are required to register a company or branch office in Taiwan under the Company Act and complete AML registration before providing virtual asset services within Taiwan’s borders. Cheng emphasizes the importance of this requirement: “If they want to register, they first need to have an office in Taiwan, register a company, or have a subsidiary in Taiwan.”
Penalties for Non-Compliance
The SFB has emphasized that violators of these regulations may face criminal penalties of up to two years imprisonment. This strict approach underscores the government’s commitment to ensuring compliance within the crypto sector.
Registration Guidelines and Information
The SFB has provided comprehensive guidelines and information for VASP registration, including measures for AML and counter-terrorism financing, management guidelines for virtual asset platforms, and examples of monitoring patterns for suspicious transactions.
Cheng highlights the broad scope of the regulations: “The Financial Supervisory Commission in Taiwan believes that whether you handle money or not, as long as you operate, you need to comply.” This comprehensive approach ensures that all aspects of virtual asset services are covered under the new regulations.
Grace Period and Transition
For existing operators, there is a grace period to transition to the new regulatory framework. “These 26 operators can enjoy this grace period, which means that after November 30th, within 4 months, before March 31st, if they submit a new registration application to the Financial Supervisory Commission, they can continue to operate until September 2025,” Cheng explains.
However, for new entrants or those not among the 26 existing operators, the requirements are more immediate. Cheng clarifies, “If they are not among the 26 operators, then from November 30th, they must first cease operations until they re-apply, that is, they need to separately review this registration, and can only operate after completing this process.”
Industry Response and Implications
The announcement has generated significant interest within the crypto industry, both domestically and internationally. The high number of views on the SFB website within 24 hours of the announcement indicates the level of attention from both existing domestic operators and overseas entities looking to enter the Taiwanese market.
Cheng notes the potential challenges for international companies: “Taiwan is a country with high political sensitivity, so if a company wants to register before setting up, the process of registering a branch or a regular company in Taiwan will be very long because Taiwan is very concerned about the source of funds.”
Looking Ahead
As the deadline approaches, the industry is gearing up for a significant shift. “We are seeing a rapid increase in demand for compliance professionals in the market, which presents a new opportunity. This regulatory framework not only challenges businesses but also opens up new avenues for expertise in crypto compliance,” Cheng noted.
About the Author
Joe Pan is an editor at Blockwind News and an early adopter of blockchain technology. He has covered major crypto conferences globally since 2019 and frequently moderates Web3 events across Asia. Joe is part of the founding team of NFTMetta and Blockwind News.
