TAIWAN Trends and Developments Contributed by: James Huang, Eddie Hsiung and Maggie Huang, Lee and Li, Attorneys-at-Law
incorporated under the laws of Taiwan and must not be a company listed on the Taiwan Stock Exchange or TPEx or traded on the Emerging Stock Market. The issuer may only issue profit- sharing or debt tokens without shareholders’ rights, and only professional investors are eligi - ble to participate in STOs. Where a professional investor is a natural person, the maximum sub - scription amount is NTD300,000 per STO. There are also rules governing the STO platform operator. An STO platform operator should: • obtain a securities dealer licence; • have minimum paid-in capital of NTD100 mil - lion; and • provide an operation bond in the amount of NTD10 million. Such platform operator should enter into an agreement with the Taiwan Depository and Clearing Corporation, and should daily transmit trading information such as balance changes and balance statements to the Taiwan Deposi - tory and Clearing Corporation for its records. The Taiwan Depository and Clearing Corporation should provide an STO balance inquiry service to investors. At the time of writing, no STOs have been con - ducted under the STO Regulations, though it has been reported that an STO in Taiwan may be forthcoming in the near future. Although cryptocurrencies are not legal ten - der and are not subject to financial regulations (except for security tokens), Taiwan’s Money- Laundering Control Act (the “AML Act”) has brought cryptocurrency platform operators within the local anti-money laundering (AML) regulatory regime. Thereunder, enterprises fall - ing within the designated scope will be subject
to the relevant rules applicable to financial insti - tutions under the AML Act. On 7 April 2021, Taiwan’s Executive Yuan issued a ruling (the “AML Ruling”) that interpreted the scope of enterprises of “virtual currency plat - forms and trading business” under the AML Act, and which took effect on 1 July 2021. The scope described under the AML Ruling covers those entities that engage in the following activities on others’ behalf: • exchange between virtual currencies and New Taiwan dollars (NTDs), foreign curren - cies or currencies issued by Mainland China, Hong Kong or Macau; • exchange between virtual currencies; • transfer of virtual currencies; • custody and/or administration of virtual cur - rencies, or providing instruments enabling control over virtual currencies; and • participation in and provision of financial ser - vices related to the issuance or sale of virtual currencies. After the AML Ruling was issued, the FSC prom - ulgated the Regulations Governing Anti-Money Laundering and Countering the Financing of Ter - rorism for Enterprises of Virtual Currency Plat - forms and Trading Business (the “AML Regu - lations”). According to the AML Regulations, the designated operators of crypto-assets and exchanges are required to establish (among oth - ers): • internal control and audit mechanisms; • a reporting procedure for suspicious transac - tions; and • a know-your-customer (KYC) procedure. In addition, the designated operators must sub - mit a “compliance declaration” to the FSC, indi -
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