TAIWAN Trends and Developments Contributed by: James Huang, Eddie Hsiung and Maggie Huang, Lee and Li, Attorneys-at-Law
• Information disclosure (including disclosure of the material contingencies events). • Internal control and audits (including the mechanism of self-audit, compliance and risk management). • Applicability of the guidelines to offshore VASPs – specifically, offshore VASPs must not engage in advertising activities and solici - tation of business within the territory of Tai - wan or targeting Taiwanese persons, unless they have completed the corporate registra - tion in accordance with the Taiwan Company Act and have duly made an AML compliance statement with the FSC. Following the announcement of the VASP Guide - lines, as requested by the FSC, certain local VASPs formed a working group in preparation for the establishment of an industry association (or self-regulatory organisation) for VASPs. Such VASP association was formally established in June 2024. Furthermore, the FSC is contemplating the intro - duction of a specific cryptocurrency law, with a draft expected to be unveiled before mid-2025. Industry participants are advised to keep a close watch on potential regulatory developments in Taiwan. Also, considering the demand for virtual cur - rency transactions and international trends, the FSC has announced the launch of a pilot programme for “virtual asset custody” services, allowing banks and brokerage firms to apply. It is expected to be implemented as early as the first quarter of 2025. According to relevant news reports regarding the methods for the “custody” of virtual currencies, the FSC may propose two approaches. The first is to safeguard customers’ private keys, such
as storing a series of alphanumeric characters held by customers in a physical safe or on a USB device. The second is for banks to use algorithms to safeguard private keys, though this involves technical and information security standards (posing higher risks), and traditional banks currently have limited experience in this area. Relevant news reports have also indicated that three banks have expressed interest in this area. Central Bank Digital Currency (CBDC) According to publicly available information, the Central Bank has set up a special task force on the study of CBDC, which is generally consid - ered to be digital New Taiwan dollar. The CBDC task force has already completed two explora - tory projects on the feasibility of issuing: • a “wholesale CBDC” (ie, CBDC used by finan - cial institutions), with the preliminary obser - vation that a platform built with distributed ledge technology (DLT) does not necessarily perform better than a platform with a central - ised system; and • a “retail CBDC” (ie, CBDC for use by the general public). According to news reports in June 2022, the President of the Central Bank, Mr Chin-Long Yang, gave a seminar speech indicating that the previous CBDC projects had been carried out in a closed-end environment, and the next major steps regarding CBDC were to: • ensure the CBDC system’s stability; • establish a legal framework for CBDC; and • communicate with the general public. As CBDC will affect people’s payment habits (eg, as opposed to payment with cash, credit cards or other emerging payment services rendered
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