Taiwan Taps Financial Watchdog as Primary Regulator for Crypto

Taiwan is set to establish the Financial Supervisory Commission (FSC) as the primary regulator overseeing the crypto industry as part of its efforts to tighten control after the market turmoil triggered by the collapse of the FTX crypto empire. Sources familiar with the matter have revealed that the announcement of the FSC as the chief regulator of crypto exchanges and virtual assets could be made by the end of March.

The move is a significant departure from Taiwan’s previously hands-off approach to the industry, reflecting a growing trend among regulators to increase oversight amid a turbulent year for crypto markets. While Singapore and Hong Kong have taken a more proactive stance, Taiwan has been more reticent until now.

The FSC’s Banking Bureau has been driving the regulatory changes and has held discussions with crypto exchange operators. The first companies to be regulated under the new guidelines will be those that provide virtual asset trading services. Following the announcement of the main crypto regulator and overall guidelines for regulations, the FSC is expected to work with industry participants on “self-regulation measures.”

However, the regulation of virtual assets is complex, and other FSC bureaus may also be involved in the final decision. For instance, virtual assets with the characteristics of marketable securities could be regulated by the Securities and Futures Bureau, while NFT regulation could involve the cabinet’s Digital Affairs Ministry. Stablecoins associated with fiat money could involve the central bank. Discussions are ongoing, and plans could change.

FSC Chairman Huang Tien-mu has told reporters that the FSC will follow the cabinet’s instructions on the next steps, including the timing of any announcement. While the move to appoint a crypto regulator is a significant shift for Taiwan, it is reflective of the growing recognition among regulators that the industry requires greater oversight.

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