New chapter in crypto regulation? Taiwan and El Salvador join forces

Posted: September 19, 2023

• The Taiwan Crypto Association initiated communication with key institutions in El Salvador.
• The aim is to bolster regulatory capabilities and align their approaches to cryptocurrency oversight.

Taiwan and El Salvador have teamed up to strengthen cryptocurrency regulations. This collaborative effort comes as Taiwan seeks to enhance its own crypto regulations, particularly in areas such as stablecoin issuance and cryptocurrency derivatives trading, both of which are currently prohibited under its existing rules.

The Taiwan Crypto Association initiated communication with key institutions in El Salvador, including the Virtual Assets Bureau, Presidential Office, and central bank. Their aim is to bolster regulatory capabilities and align their approaches to cryptocurrency oversight.

Global collaboration to strengthen cryptocurrency oversight efforts

In Taiwan, discussions surrounding cryptocurrency regulation have gained prominence, with a recent Virtual Asset Supervision public hearing led by legislator Kuo Kuo-wen delving into various crypto-related topics.

These discussions have included the potential introduction of leveraged derivatives trading and the establishment of a dedicated Financial Technology Bureau.

Representatives from major cryptocurrency exchanges, Bitfinex and Binance [BNB], were among the attendees at the hearing. The Virtual Assets Bureau is expected to play a pivotal role in enhancing protection for crypto traders and overseeing digital asset trading activities within Taiwan.

Additionally, local sources have indicated that Taiwan intends to unveil its Virtual Asset Service Providers (VASP) guidelines by the end of September.

The Financial Supervisory Commission (FSC) will take on the responsibility of monitoring digital currencies, combating money laundering, and ensuring that crypto companies and exchanges adhere to the prescribed regulations.

This stance on crypto regulation represents a notable shift for Taiwan, which previously maintained a relatively hands-off approach to cryptocurrency oversight.

The authorities’ main concern had been to prevent money laundering, leading to the licensing of 24 cryptocurrency firms under anti-money laundering regulations in September 2022.

However, a significant turning point occurred when FTX [FTT] faced a crisis and eventually declared bankruptcy.

This move comes despite varying approaches to cryptocurrencies worldwide, with some nations embracing digital assets while others remain cautious or adopt restrictive measures.

Mainland China, for instance, has banned cryptocurrency mining and trading, but Taiwan’s recent actions indicate its commitment to ensuring effective control over the dynamic crypto sector through a comprehensive regulatory framework.