TAIWAN Trends and Developments Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
• Domestic bonds: Through a self-developed block - chain and RWA trading platform, services such as subscription, issuance, trading, interest distribu - tion, principal and interest repayment, and custody are provided for TWD-denominated corporate and financial bonds (digitally native tokens). The plat - form is connected to the Central Bank’s tokenised payment platform, using TWD deposit tokens to achieve Delivery versus Payment (DVP). • Foreign bonds: Through a blockchain platform built by TDCC, foreign bonds are tokenised (digital twins) and fractionalised, providing services such as interest distribution and principal and inter - est repayment. A self-developed trading platform offers trading services for investors and proprietary traders, and connects to the FISC payment plat - form, using USD deposit tokens to achieve DVP. • Funds: Through a blockchain platform built by TDCC, TWD money market funds and Taiwan equity funds are tokenised (digital twins), provid - ing services such as subscription, redemption and trading. The platform connects to the FISC payment platform, using TWD deposit tokens to achieve DVP. For all three above, blockchain and smart contract technologies are used in both primary and secondary markets, and the payment platform’s deposit token function is integrated. This achieves reduced settle - ment times, near round-the-clock trading, automated interest/principal payments, lower investment thresh - olds and improved operational, regulatory and capi - tal efficiency as demonstrated and expected benefits. However, it is worth noting that during the POC pro - cess, industry participants collected a large number of international cases and experiences, finding that many issues remain unresolved globally. Therefore, Taiwan’s future promotion must proceed steadily: • Efficiency: Although there are already RWA token trading platforms and related mechanisms inter - nationally, their trading volumes are still low compared to traditional capital market bonds and funds. Since traditional capital markets already have high trading and settlement efficiency, most current test cases are small-scale. Whether high efficiency can be maintained as the market scales up remains to be seen.
• Regulation: Observations of countries that have developed RWA token trading show that relevant laws and regulations have not yet converged. Approaches include enacting new laws, amending existing laws or interpreting current regulations. Each regulatory adaptation approach has its pros and cons, and must be tailored to local conditions while considering future international alignment. • Market participants: Taking RWA tokens backed by securities as an example, global securities trad - ing has developed over 400 years (with Taiwan’s securities market having a 60-year history), result - ing in intermediaries such as securities firms and market infrastructures such as exchanges and central depositories. Transitioning from traditional centralised capital markets to mechanisms using smart contracts, decentralisation or disintermedia - tion will be a major transformation. How traditional institutions transform, how investors change their investment models, and how to maintain market confidence and order all require testing and adjust - ment. The FSC stated that, based on the above POC, its future focus will be on three main areas: regulatory adaptation, token trading platform establishment and international linkage: • Regulatory adaptation: The FSC has commissioned TDCC and the Taipei Exchange to outsource research on regulatory adaptation issues for securi - ties tokenisation. In addition, RWA tokenisation and stablecoins will be studied as two separate groups for regulatory adaptation. • RWA token trading platform establishment: Plans are in place for relevant institutions to jointly form an RWA token trading platform and to promote platform planning and construction. Ongoing work will continue on the platform’s operational and supervisory framework. • International linkage: Once regulatory adaptation and platform planning directions are clarified, co- operation projects with international institutions will be promoted in due course to strengthen the con - nection between Taiwan’s RWA tokenisation and global markets.
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