TAIWAN Law and Practice Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
is not required if the total amount of funds held by the institution as an agent does not exceed the limit set by the FSC. Such entities are clas - sified as “third-party payment service providers” under Taiwan’s current regulatory regime. How - ever, with the recent amendment to the Taiwan AML Act, these providers must now register with the FSC for AML purposes. Failure to complete this registration could result in criminal liability. Robo-Advisers In June 2017, the Securities Investment Trust and Consulting Association of Taiwan, the self- disciplinary body for the asset management industry, introduced the Operating Rules for Securities Investment Consulting Enterprises Using Automated Tools to Provide Consulting Service (the “Robo-Adviser Rules” ), as approved by the FSC. According to these rules, securities investment consulting enterprises (SICEs) are permitted to offer online securities investment consulting services through automated tools utilising algorithms ( “Robo-Adviser Services” ). SICEs are obligated to adhere to specific regu - lations, including the following: (i) conducting periodic reviews of the algorithm; (ii) completing relevant know-your-customer procedures before providing advice; (iii) establishing a special com - mittee to supervise the adequacy of the Robo- Adviser Services; and (iv) informing customers of precautions before utilising Robo-Adviser Services. For the purpose of “rebalancing transactions” by robo-advisers, the FSC relaxed certain restric - tions in 2021. This enables the execution of rebalancing transactions based on pre-agreed investment portfolios between the robo-adviser and its clients, involving securities investment trust funds or offshore funds (approved by or registered with the FSC), subject to the following conditions: (a) following the pre-agreed funds list
with the client (up to 30 funds); and (b) aggre - gation of the absolute value of the change in the investment proportion for each portfolio, not exceeding 60%. In March 2024, the FSC revised laws and regula - tions to promote automation and improve effi - ciency for securities firms, removing the previ - ous ban on using computer systems to execute Robo-Adviser rebalancing transactions for cli - ents. Cryptocurrency Cryptocurrency with the nature of securities (ie, security tokens) is subject to the rules and regulations governing security token offerings (STOs), while cryptocurrency without the nature of securities is subject to anti-money launder - ing related regulations. Please see 2.14 Impact of AML and Sanctions Rules , 6.1 Permissible Trading Platforms , 10.3 Classification of Block - chain Assets and 10.4 Regulation of “Issuers” of Blockchain Assets . 2.3 Compensation Models Please see below our understanding of the basic compensation models that may be adopted by certain fintech industry players: Peer-to-peer lending: Charges by platform oper - ator for matching the lenders and borrowers. E-payment: Charges from contracted merchants for carrying out the transactions. Robo-adviser: The SICEs charge consulting fees for rendering online securities investment con - sulting services through automated tools utilis - ing algorithms. Cryptocurrency: Depending on the business models adopted, exchanges/platform operators
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