TAIWAN Law and Practice Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
10.8 Cryptocurrency Derivatives Derivatives trading could be classified as a regulated activity, even when the underlying assets are cryptocurrencies, rather than tradi - tional assets like stocks, interest rates or foreign exchange. 10.9 Decentralised Finance (DeFi) It seems that the Taiwan government has not officially expressed its stance on DeFi activities. However, it is important to consider the classi - fication of DeFi activities on an individual basis, as there are no specific laws or regulations in place to govern or establish a legal framework alongside the growth of DeFi. It is necessary to review existing laws related to banking, trusts and futures to ensure adherence to applicable Currently, blockchain assets, including bitcoins, may not be invested by funds registered with or approved by the FSC. 10.11Virtual Currencies The term “virtual asset” is defined in the Crypto AML Registration Regulations and the Crypto AML Regulations (as indicated in 2.14 Impact of AML and Sanctions Rules ) as a digital repre - sentation of value with the use of cryptography, DLT or other similar technology that can be digi - tally stored, exchanged or transferred, and can be used for payment or investment purposes. However, virtual assets do not include digital representations of the New Taiwan Dollar, foreign currencies, currencies issued by Mainland China (ie, the PRC), Hong Kong or Macau, securities, and other financial assets issued in accordance with laws. There is no official/separate definition of “blockchain assets” under current Taiwan laws and regulations. existing laws and regulations. 10.10Regulation of Funds
10.12Non-Fungible Tokens (NFTs) Currently, there are no specific laws or regula - tions pertaining to NFTs, which are commonly structured to represent digital art, music, col - lectibles, sports cards, photo albums and more. Therefore, the applicable laws and regulations should be determined based on their individual characteristics. The most recent discussions surrounding NFTs have focused on what an NFT holder owns or obtains. It is important to review and examine the classification of each individual NFT on a case-by-case basis. Specifically, despite the “non-fungible” nature of NFTs, we cannot com - pletely rule out the possibility of financial laws, such as securities regulations, applying to NFTs or their offerings. Responding to the call for “open banking” from industry players and experts, the FSC has requested the Bankers Association to establish self-regulatory rules relating to the implementa - tion of open banking in Taiwan. Choosing not to impose mandatory disclosure rules on banks, the FSC instead requested the self-regulatory organisation (ie, the Bankers Association) and the Financial Information Service Co. (FISC) to develop pertinent rules and information security standards for banks to follow. The FSC has instituted a three-phase approach to the implementation of open banking. Phase I, which commenced in late 2019 permitted the accessibility of public product information by third parties, specifically third-party service pro - viders (TSPs). Phase II involved gaining access to customer data, and according to related FSC 11. Open Banking 11.1 Regulation of Open Banking
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