TAIWAN Trends and Developments Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
to offer and manage these funds. If domestic funds or ETFs want to invest in bitcoin or other cryptocurrencies, significant adjustments to the aforementioned regulations may be required. Of course, this would also require support from FSC policies to be achieved. Task force for tokenisation of real-world assets (RWAs) In a June 2024 press release, the FSC highlighted that the global trend of tokenising RWAs is seen as offering several potential benefits, such as enabling 24/7 cross-border and cross-time-zone trading, reducing investment barriers, improving operational efficiency, facilitating instant settle - ment, and enhancing liquidity and transparency. However, the FSC also acknowledged the chal - lenges surrounding regulation, legality and inter - operability. To explore the necessary steps for advancing RWA tokenisation in Taiwan, the FSC established a task force in collaboration with the Taiwan Depository & Clearing Corporation and six financial institutions. According to the press release, RWAs may include stocks, bonds, real estate, precious metals and even intangible assets such as carbon credits. The goal is for the participating financial institutions to create proof of concept projects, pilot programs, or innovation experiments, aimed at driving more innovative and holistic development of financial technology. Pilot programme for banks providing crypto custody services Under the current laws and regulations, only registered VASPs – those that have completed AML registration under the Crypto AML Regis - tration 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 current legal framework. However, recognising the growing internation - al trend of financial institutions offering virtual asset custody services, the FSC has launched a pilot programme allowing financial institutions to provide these services. Applications will be accepted from 1 January 2025 to 30 April 2025, with no limit on the number of applicants. The pilot programme is set to run for six months, with a review period of approximately two months. The FSC will assess the outcomes and experi - ences of the pilot to inform future policy deci - sions. The potential for fully opening the market to financial institutions offering virtual asset cus - tody services will depend on the results of this pilot programme. Digital Insurance Companies? Acknowledging the digital transformation within the insurance sector and the necessity to fos - ter innovative insurance products, the FSC introduced a new policy outlining the process for establishing digital-only insurance compa - nies, complete with a policy road map and a tentative timeline at the end of 2021. Further, the FSC announced draft amendments to per - tinent regulations for this purpose in April 2022. These amendments aimed to delineate the pre - requisites for the establishment of digital-only insurance companies, along with proposed changes to regulations governing their insur - ance solicitation, underwriting and claims settle - ment processes. According to new 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 applications), neither of which were approved by the FSC. Later, the FSC reported that it would
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