TAIWAN Law and Practice Contributed by: Robin Chang, Ken-Ying Tseng and Eddie Hsiung, Lee and Li, Attorneys-at-Law
ties related to the virtual assets involve any improper or false statements, or any conduct that is fraudulent, concealed, or otherwise likely to mislead others. Additionally, the FSC issued the “Guidelines for the Management of Virtual Asset Service Provider” (the “VASP Guidelines”) in September 2023, which set forth customer protection requirements, including: • Fair Contracting Principles – VASPs must enter into contracts for the provision of virtual-asset products or services with customers based on principles of fairness, reasonableness, equality, reciprocity, and good faith. • Risk Disclosure – prior to entering into such contracts, VASPs are required to fully disclose to customers the key terms, features, and risks asso- ciated with the relevant products, services, and contracts. • Advertising Standards – VASPs must ensure that all advertising, solicitation, and promotional activi- ties are free from false, fraudulent, or misleading content. All promotional materials must be accu- rate and truthful. • Complaint Handling – VASPs are required to estab- lish procedures for handling customer complaints and to resolve disputes related to virtual-asset transactions in a fair and timely manner. 4.2 White Labelling Taiwanese law does not have explicit regulations regarding white labelling. However, it cannot be ruled out that such arrangements may be viewed as an off- shore exchange (one that is not registered in Taiwan) providing services within Taiwan, which may therefore constitute a violation of Taiwanese regulations.
ity, where authorities may trace responsibility back to the individuals (ie, natural persons) involved. As for CeFi providers, if they provide services to cli- ents using their own positions while utilising DeFi protocols “behind the scenes”, there appears to be no explicit legal prohibition. However, in theory, these CeFi providers are expected to maintain a certain level of robust internal controls to prevent their use of DeFi from causing a material adverse impact on their operations. 5.2 DeFi Structures See 5.1 Ability to Use DeFi . 5.3 Liability As advised in 5.1 Ability to Use DeFi , if there is indeed one or more principal parties “behind” the DeFi ser- vices, they could still be held liable for any violations of Taiwanese law, especially if criminal liability is involved. There have been no major announced cases involving enforcement actions for DeFi. Under the current legal framework in Taiwan, there are no explicit prohibitions that prevent the use of cryp- tocurrencies for payment purposes in general com- mercial transactions. This means that private parties may legally agree to use cryptocurrency as a form of consideration, provided the transaction does not involve regulated financial services or trigger anti- money laundering obligations. 6.2 Stablecoins 6.2.1 Fiat Currency and Algorithmic Stablecoins In the draft of Taiwan’s specific law for virtual assets (ie, draft Virtual Asset Service Act or Draft Act), there is a specific section dedicated to stablecoins. Under this Draft Act, stablecoins are required to maintain 100% reserve; consequently, “algorithmic” stablecoins will not be permitted to exist. 6. Payments and Stablecoins 6.1 Payments
5. Decentralised Finance 5.1 Ability to Use DeFi
There are no specific regulations for DeFi in Taiwan. From the perspective of Taiwanese law, it is difficult to conceive of virtual-asset products that have no service provider at all. If there is indeed one or more principal parties “behind” these services, they could still be held liable for any violations of Taiwanese law. This is especially true in cases involving criminal liabil-
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