Upcoming Regulation on Virtual Asset Management FSC Announces FourPhase Management Plan Set to Be Submitted to Executive Yuan in June 2025
The formulation of the Virtual Asset Service Providers (VASP) special law finally has a clear process. Financial Supervisory Commission Chairman, Thomas Huang, will report to the Finance Committee on the 12th, planning to gradually promote the management of virtual asset operators in four phases, and plans to propose a special law draft by the end of 2024. It is expected to complete the draft before June 2025 and submit it to the legislature for review.
Financial Supervisory Commission publicly confirmed the special law for the first time
Phase One: Including virtual asset operators in the management
Phase Two: Establishing an association and formulating self-discipline regulations
Phase Three: Strengthening anti-money laundering management
Phase Four: Formulating a special law
This is the first time that the Financial Supervisory Commission has publicly detailed the schedule and plan for establishing a special law for virtual asset management. The formulation of the special law will take into account international regulatory standards, focusing on six major regulatory points including operator licensing conditions, consumer protection, capital requirements, asset management, market trading behavior norms, and business development.
In the first phase, the Financial Supervisory Commission will start including relevant operators from Virtual Asset Service Providers (VASP) in anti-money laundering measures. At present, 25 operators have completed compliance declarations, with business models covering exchanges, trading platforms, physical storefronts, virtual asset ATMs (BTMs), and custody system providers.
The second phase will promote the establishment of an association for VASP and the formulation of self-discipline regulations. The association will formulate self-discipline regulations based on the eight guiding principles set by the Financial Supervisory Commission. It is expected that this Thursday (the 13th), VASP will officially establish the association.
In the third phase, the Financial Supervisory Commission will add a VASP registration system to the anti-money laundering law, clearly defining VASP and imposing criminal penalties on illegal operators. VASP that engage in business without registering as required may face up to two years in prison and a fine of up to 5 million New Taiwan dollars. The Financial Supervisory Commission plans to differentially manage registered VASP based on the complexity of their operations.
VASP operating in the form of exchanges must adhere to the most comprehensive internal control regulations, including matching trading rules explanation, information system establishment (compliance with ISO27001 information security requirements), wallet management (at least half of the position must be a cold wallet), and platform and customer asset separation.
Among the 25 VASP that have completed anti-money laundering compliance declarations, such as ACE, BitoEX, MaiCoin, XREX, HOYA, all belong to the exchange type and must comply with complete regulations.
The final stage will move towards the formulation of a special law. The Financial Supervisory Commission will outsource the VASP management special law research in January 2024, taking into account various countries and international standards to determine the six major regulatory points. The research team is expected to submit a final report by the end of September 2024 and propose a special law draft by the end of the year, holding a public hearing. The Financial Supervisory Commission plans to submit the special law draft to the legislature for review before June 2025.
This time, the Financial Supervisory Commission has clearly revealed the promotion plan for the special law on virtual asset management, showing the government’s emphasis on the virtual asset market. With the gradual formulation and implementation of the special law, the market is expected to usher in a more regulated and secure development environment, further safeguarding the rights of investors.
