- Taiwan advances AML regulations targeting crypto firms to strengthen compliance.
- FSC plans virtual asset custody trials in 2025, with three banks showing interest.
- Strict oversight aims to enhance security and block illegal virtual asset transactions.
Taiwan has taken a decisive step forward in regulating cryptocurrency businesses under its Anti-Money Laundering (AML) framework. This comes after two exchanges faced penalties for non-compliance. Authorities emphasized the enforcement of Article 6 of the Money Laundering Prevention Law, mandating virtual asset service providers (VASPs) to complete AML registration.
From now on, only the registered enterprises are allowed to legally offer virtual asset services in Taiwan. Starting immediately, overseas entities that want to offer services must create a local presence and register accordingly. Violators will face stiff penalties, including imprisonment of up to two years.
This regulatory shift underlines that Taiwan is committed to fighting illicit financial activities related to virtual assets. The regulators have also put in place thorough guidelines and monitoring mechanisms that will help enterprises understand the path of compliance.
Crypto Asset Custody Trials on the Horizon
Last month, Taiwan’s FSC announced that it would begin trials for virtual asset custody services early this year, with the aim of encouraging financial innovation. It will be joined by three private banks in the trials that could also be extended to institutional investors and virtual asset exchanges.
The FSC seeks comments from the public before promulgating the operational guidelines. To start, the experimentation will be done on custody of assets, such as Bitcoin and Ethereum, with adequate assurance of the implementation of AML. The institutions should define in detail what custody services are and for whom they should meet the expectations of the regulation.
According to Hu Zehua, Director, the custody business is a very important event for security since huge values of virtual currencies would be involved. Banks are more capable of ensuring safety and compliance for such operations than smaller securities firms.
Striking a Balance Between Innovation and Security
By balancing AML oversight with fostering thematic trials, Taiwan shows that a dual approach has been important in balancing this scale. Along with the introduction of increased regulatory oversight, the tightened virtual asset controls aim at eventually fostering greater security.
Additionally, conformance in an ongoing-developing ecosystem, reducing possible risks concerning illegal transactions while working to regain full public trust in cryptocurrency offerings and their services. Yet, if Taiwan goes ahead with more regulation in the evolving setting, it could set an example for countries facing similar tests and put them in leadership for crypto regulation.
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