TAIWAN Law and Practice Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
preparations needed to advance RWA tokenisa - tion in Taiwan and to foster more innovative and strategic development of financial technology. Therefore, it is recommended that industry par - ticipants closely monitor the progress of these developments. 10.3 Classification of Blockchain Assets In December 2013, the Central Bank and the FSC initially conveyed the government’s stance on bitcoin through a joint press release (the “2013 Release” ). As outlined in the 2013 Release, both authorities asserted that bitcoin does not qualify as “legal tender” , “currency” or “generally accepted medium of exchange” . Instead, they classified it as a highly speculative digital virtual commodity. Furthermore, in March 2022, the FSC issued another press release affirming that crypto-assets, including bitcoin, are not recog - nised as currencies within the existing regulatory framework in Taiwan. Instead, these assets are considered digital virtual commodities. Addressing the proliferation of initial coin offer - ings (ICOs) and other fundraising and investment activities involving virtual currencies or crypto - currencies, the FSC released a press statement in December 2017 (the “2017 Release” ) articu - lating its stance on ICOs. According to the 2017 Release, an ICO involves the issuance and sale of virtual commodities (such as digital interests, assets or virtual currencies) to investors. The categorisation of an ICO is contingent on a case- by-case assessment. If an ICO encompasses the offer and issuance of securities, it falls under the purview of Taiwan’s Securities and Exchange Act (SEA). Whether tokens in an ICO are deemed securities under the SEA is contingent on the specific circumstances of each case.
In July 2019, the FSC officially designated cryp - tocurrencies as having the nature of securities (ie, so-called “security tokens” ) under the SEA (the “2019 Ruling” ). According to the 2019 Rul - ing, security tokens refer to those that: (1) utilise cryptography, DLT or other similar technolo - gies to represent their value that can be stored, exchanged or transferred through digital mecha - nisms; (2) are transferable; and (3) encompass the following attributes of an investment: (a) funding provided by investors; (b) funding pro - vided for a common enterprise or project; (c) investors expecting to receive profits; and (d) profits generated primarily on the efforts of the issuer or third parties. 10.4 Regulation of “Issuers” of In 2020, the FSC, in collaboration with the Tai - pei Exchange (TPEx), embarked on the develop - ment of regulations governing tokens having the nature of securities. Below are certain key rules under the STO regulations: Blockchain Assets For security tokens: (1) For STOs with a value of TWD30 million or less, the issuance may be carried out follow - ing the STO regulations. For STOs exceeding TWD30 million in value, the issuing entity must first undergo evaluation within the regulatory sandbox as discussed in 2.5 Regulatory Sand- box . (2) Qualifications of the issuer: The issuer must be a Taiwan-incorporated company limited by shares not traded on the Taiwan Stock Exchange or TPEx, or the Emerging Stock Market of the TPEx. Foreign entities are barred from acting as issuers in STO programmes.
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