TAIWAN Trends and Developments Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
Pilot programme for banks providing crypto custody services Under the current laws and regulations, only regis - tered VASPs – those that have completed AML regis - tration under the Crypto AML Registration Regulations and include crypto custody as part of their services – are permitted to offer crypto custody services in Taiwan. Additionally, a 2014 press release from the FSC instructed local banks not to accept bitcoin as a payment method or offer any related services. As a result, banks and financial institutions are prohibited from providing crypto custody services under the cur - rent legal framework. However, recognising the growing international trend of financial institutions offering virtual asset custody services, the FSC has launched a pilot programme allowing financial institutions to provide these ser - vices. The pilot is set to run for six months, with a review period of approximately two months. The FSC will assess the outcomes and experiences of the pilot to inform future policy decisions. The potential for fully opening the market to financial institutions offering vir - tual asset custody services will depend on the results of this pilot. Digital Insurance Companies Acknowledging the digital transformation within the insurance sector and the necessity to foster innovative insurance products, the FSC introduced a new policy outlining the process for establishing digital insurance companies, complete with a policy roadmap and a tentative timeline at the end of 2021. Further, the FSC announced draft amendments to pertinent regula - tions for this purpose in April 2022. These amend - ments aimed to delineate the prerequisites for the establishment of digital insurance companies, along with proposed changes to regulations governing their insurance solicitation, underwriting and claims settle - ment processes. According to relevant news reports, two applications for setting up digital-only insurance companies had been submitted to the FSC by 31 October 2022 (the deadline for accepting the appli - cations), both of which were not approved by the FSC. Subsequently, the FSC revisited the possibility of allowing new digital insurance companies to enter the market. To facilitate this, the FSC amended and
eased several regulatory requirements – most notably, by reducing the minimum capital needed to apply. In July 2025, the application process for digital insurers was officially reopened. The FSC anticipates that wel - coming new entrants and leveraging fintech will spark innovation within the insurance sector, speed up its digital evolution and diversify the range of available insurance products. Ultimately, these changes aim to broaden public access to insurance and advance financial inclusion. Outsourcing by Financial Services Entities With the development of technology, there have been many changes and amendments to the policies and regulations regarding outsourcing in the financial ser - vices industry in Taiwan. For example: • In accordance with the revised outsourcing rules for banks, if a bank decides to outsource its ser - vices to a cloud-based provider, it is required to: (i) ensure that there is appropriate diversification of cloud service providers; (ii) maintain complete ownership of the data that is outsourced to the cloud service provider; (iii) ensure that the process - ing and storage of data takes place within Taiwan, subject to some exceptions; and (iv) comply with the applicable laws and regulations governing out - sourcing activities when utilising cloud computing for outsourcing bank operations. • In 2023, there were further amendments to the outsourcing regulations for banks, including: (i) defining a risk-based framework for outsourcing, which includes specifying that banks have ultimate responsibility for outsourced operations and have ultimate responsibility for outsourced operations, and they should assess the risk level, significance, and impact on operations and customer rights of the outsourced matters and adopt appropriate control measures based on a risk-based approach; (ii) simplifying the outsourcing application process and documents; and (iii) adjusting the scope of applications to the regulatory authority for cross- border and cloud-based outsourcing operations. • In the past, only banks and insurance companies had relatively clear regulations for outsourcing in the financial services industry. Other types of financial services entities such as securities firms, securities investment trust enterprises and futures
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