TAIWAN Trends and Developments Contributed by: James Huang, Eddie Hsiung and Maggie Huang, Lee and Li, Attorneys-at-Law
“Digital-Only” Banks In 2018, Taiwan’s financial regulator, the Finan - cial Supervisory Commission (FSC), promul - gated regulations governing the establishment of “digital-only” banks, which are defined as banks without physical branches. The establish - ment of digital-only banks is generally expected to encourage cross-industry combinations and fintech applications for everyday life by building a fintech ecosphere. Following the promulgation of these regula - tions, three applications to set up digital-only banks were filed with the FSC in early 2019, all of which were approved by the FSC on 30 July 2019. At the time of writing, all three digital-only banks have received an operating licence from the FSC. The creation of digital-only banks is expected to foster cross-industry collaborations and to inte - grate fintech solutions into daily life by devel - oping a fintech ecosystem. To address market developments and the innovative nature of digi - tal-only banks, the FSC engaged in discussions with all digital-only banks with the purpose of relaxing the restrictions on the operations con - ducted by digital-only banks in the following four areas: • deposits; • credit; Also, the FSC has been researching the super - vision of digital-only banks, focusing on topics such as real-time monitoring of liquidity risk and other important matters of digital banks, as well as on the introduction of suptech (supervisory technology) and regtech (regulatory technology) • fund sales; and • online insurance.
into the supervision and surveillance of digital banks’ business activities. “Digital-Only” Insurance Companies In December 2021, in consideration of the digital transformation of the insurance industry and the need to develop and promote relevant, innova - tive insurance products, the FSC proposed the new policy regarding the application for estab - lishment of digital-only insurance companies, including a policy roadmap and tentative time - line. Later, in April 2022, the FSC announced the draft amendments to relevant regulations in order to set forth the requirements for the establishment of digital-only insurance companies, as well as the draft amendments to relevant regulations for their insurance solicitation, underwriting and claims settlement. These amendments were offi - cially made and completed at the end of June 2022. According to the FSC’s newsletter, only two applications were filed with the FSC by 31 Octo - ber 2022, and neither were approved by the FSC. As reported in the news in July 2024, the FSC plans to assess the possibility of reopening applications for digital-only insurance compa - nies, with an announcement regarding the plan expected by the end of 2024. Virtual Currencies Cryptocurrencies (ie, digital currencies or virtual currencies based on blockchain technology) that are not linked or tied to a government-issued currency of any nation are currently not accept - ed as currencies by Taiwan’s central bank, the Central Bank of the Republic of China (Taiwan). In December 2013, both the Central Bank and the FSC expressed the government’s position towards Bitcoin in a joint press release, in which
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