Taiwan

FSC — VASP guidelines and oversight — dedicated law under legislative review

**Regulator/Enforcement Body:** Taipei District Prosecutors Office, New Taipei District Prosecutors Office, Criminal Investigation Bureau (CIB).

**Entity Targeted:** David Pan (潘奕hofer), founder of ACE Exchange, and approximately 10 other individuals.

**Penalty Amount:** Assets worth over NT$200 million (approximately US$6.4 million) were frozen, including real estate, luxury cars, and cryptocurrency. The investigation is ongoing, and final penalties (imprisonment, further asset forfeiture) will be determined by the courts.

**Date:** January 8, 2024 (arrests and initial actions).

**Outcome:** Key individuals, including the founder of a prominent Taiwanese exchange, were arrested. Assets were frozen, and legal proceedings are underway. This was a major blow to investor confidence and highlighted the risks within the unregulated parts of the crypto market.

Taiwan News: ACE Exchange founder among those arrested in fraud probe

Taipei Times: ACE Exchange founder arrested for fraud

CNA: ACE Exchange founder, others held in fraud probe

**Regulator/Enforcement Body:** Various local police departments (e.g., Tainan City Police Department, Kaohsiung City Police Department), District Prosecutors Offices.

**Entity Targeted:** Numerous individuals and groups promoting "Pi Network" as a guaranteed high-return investment or operating multi-level marketing (MLM) schemes based on its unlisted cryptocurrency.

**Violation Type:** Fraud, operating illegal pyramid schemes (violation of the Multi-level Marketing Supervision Act), misleading advertising.

**Penalty Amount:** Varies per case, but includes arrests, asset seizures (though often smaller sums of cash, not directly crypto), and fines/imprisonment upon conviction. Specific aggregate amounts for *all* Pi Network-related crackdowns are hard to tally as they are localized efforts.

**Date:** Ongoing from late 2022 through 2023 (various arrests and warnings were issued during this period).

**Outcome:** Numerous arrests across Taiwan, public warnings issued by authorities regarding the risks of Pi Network and similar speculative "investments," helping to protect potential victims.

CNA: Police crack down on illegal pyramid scheme using 'Pi Coin' (Example of a specific crackdown, illustrating ongoing issue)

Taiwan News: Taiwan police raid Pi Coin pyramid scheme (Another example, showing ongoing nature)

Taipei Times: Tainan police arrest nine over alleged Pi Coin pyramid scheme

**Regulator/Enforcement Body:** Criminal Investigation Bureau (CIB), Taipei District Prosecutors Office.

**Entity Targeted:** Individuals involved in online romance scams and investment fraud predominantly using Telegram, convincing victims to invest in fake cryptocurrency platforms.

**Violation Type:** Fraud, money laundering.

**Penalty Amount:** Arrests, freezing of bank accounts, and seizure of assets (e.g., millions of NTD in illicit gains). Specific fines and prison sentences are determined post-conviction. One operation in 2023 alone saw NT$110 million (US$3.5 million) in illicit gains seized.

**Date:** Ongoing throughout 2022 and 2023 (multiple distinct operations against such groups).

**Outcome:** Multiple arrests, significant amounts of illicit funds frozen or seized, raising public awareness about online investment scams.

Taiwan News: Taiwan police nab 17 for Telegram-based crypto investment fraud (July 2023 example)

CIB Press Release (Chinese): Search for "刑事警察局 假投資 真詐財" often yields multiple press releases on such cases. Example release (though this one might be outside the 3-year window for *specific* enforcement details, it shows the *type* of ongoing enforcement). Finding English specific press releases on individual operations can be challenging, but news articles frequently cover them.

**Exchange** between virtual assets and fiat currencies.

**Exchange** between one or more forms of virtual assets.

**Custody and/or administration** of virtual assets or instruments enabling control over virtual assets.

Participation in and provision of financial services related to an issuer’s **offer and/or sale of a virtual asset**.

**Exchanges (Virtual Asset Trading Platforms):** Absolutely fall under the VASP definition and are required to register with the FSC for AML compliance.

**Custody Providers (Wallet Services):** Explicitly covered under point 4 of the VASP definition and must register.

**Payment Processors:** If the payment processing involves:

Exchanging fiat to crypto or crypto to fiat.

Transferring virtual assets on behalf of customers.

Facilitating payments using virtual assets where they have control over the assets.

A VASP must establish a **legal entity registered in Taiwan** (e.g., a company limited by shares).

This entity will be responsible for AML/CFT compliance.

**AML/KYC/CFT Measures:** This is the core of the regulations. VASPs must implement robust programs, including:

**Customer Due Diligence (CDD):** Identifying and verifying customer identity (KYC - Know Your Customer), beneficial ownership, and the purpose and intended nature of the business relationship.

**Enhanced Due Diligence (EDD):** For higher-risk customers or transactions.

**Ongoing Monitoring:** Monitoring business relationships and transactions to ensure consistency with the VASP's knowledge of the customer.

**Suspicious Transaction Reporting (STR):** Reporting suspicious activities to the Financial Intelligence Unit (FIU) under the Ministry of Justice Investigation Bureau (MJIB).

**Record-Keeping:** Maintaining records of customer identification data, transaction data, and STRs for at least five years.

**Risk Assessment:** Conducting comprehensive risk assessments for money laundering and terrorist financing.

The current VASP AML regulations **do not specify a dedicated minimum capital requirement** specifically for AML compliance.

However, the VASP must be established as a legal entity in Taiwan, and thus must meet the general minimum capital requirements for company registration under Taiwanese company law (e.g., for a company limited by shares, the minimum capital is NTD 500,000, though a serious VASP would require significantly more operational capital).

It is widely expected that a future Virtual Asset Management Act will introduce specific, higher capital requirements for licensed VASPs, similar to financial institutions.

Establishing an **independent compliance unit** responsible for AML/CFT matters.

Appointing a **Chief Compliance Officer (CCO)** at the management level, who must be properly qualified and have sufficient resources.

Developing and maintaining comprehensive **internal control policies and procedures** for AML/CFT.

Providing **regular training** for employees on AML/CFT.

Implementing **internal audit mechanisms** to review AML/CFT compliance.

**Technology & Security:** While not explicitly detailed as a separate item, secure systems for customer data, transaction records, and overall operational integrity are implicitly required for effective AML/CFT implementation.

**Establish a Local Entity:** Register a legal entity (e.g., a company limited by shares) in Taiwan.

**Develop AML/CFT Programs:** Draft comprehensive internal control policies and procedures for AML/CFT, including KYC, transaction monitoring, risk assessment, and reporting mechanisms.

**Appoint Key Personnel:** Appoint a Chief Compliance Officer (CCO) and establish a compliance unit.

**Prepare Documentation:** Compile all required documents, which typically include:

Information on the CCO and key management.

Details of the VASP's business model and services.

**Submission to FSC:** Submit the complete application package to the Financial Supervisory Commission (FSC).

**FSC Review:** The FSC will review the submitted documents for compliance with the VASP AML Regulations. They may request additional information or clarifications.

**Registration Confirmation:** Upon successful review, the FSC will confirm the VASP's registration for AML compliance.

**Money Laundering Control Act (MLCA):** This foundational act provides the legal basis for AML/CFT in Taiwan, under which VASPs are designated as reporting entities.

**Taiwan Law and Regulation Database (English Translation):** https://law.moj.gov.tw/Eng/LawClass/LawAll.aspx?PCode=A0030103

**Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Virtual Asset Service Providers (虛擬資產平台及交易業務事業防制洗錢及打擊資恐辦法):**

**Taiwan Law and Regulation Database (Chinese version, often with an English translation linked if available):** https://law.moj.gov.tw/LawClass/LawContent.aspx?PCODE=G0380252

*Note: Direct official English translations might not always be immediately available on the same page, but the Chinese version is the authoritative one. Reputable legal firms often provide unofficial English translations or summaries.*

**FSC's Official Website (English Portal):** While not a specific regulation, the FSC's website provides general information and updates on their regulatory stance.

https://www.fsc.gov.tw/ (Navigate to English > Laws and Regulations > Financial Institution Management)

**Monetary Contribution:** An investment of money or assets by the investor.

**Common Enterprise:** The investment is made into a common enterprise or a collective project.

**Expectation of Profit:** The investor has a reasonable expectation of profits or returns from the investment.

**Third-Party Effort:** The profits are derived primarily from the efforts of a promoter or a third party, rather than solely from the efforts of the investor.

**Security Tokens (STOs):** These are specifically designed to represent traditional securities (like equity, bonds, or interests in collective investment schemes) on a blockchain. If they meet the four criteria above, they are unequivocally classified as securities and fall under the FSC's STO regulations.

**Stablecoins:** Currently, stablecoins are generally *not* treated as securities in Taiwan. The FSC is developing a separate regulatory framework for stablecoins, likely treating them more as payment instruments or e-money, potentially under the Banking Act or a dedicated regulatory regime. However, specific stablecoins that offer interest or are structured like an investment product could potentially be reviewed for security characteristics.

**Non-Fungible Tokens (NFTs):** Most NFTs (digital collectibles, art) are *not* considered securities. They are generally treated as digital assets or collectibles. However, fractionalized NFTs or NFTs that are bundled with profit-sharing mechanisms, royalty streams, or represent an interest in a collective investment scheme could potentially be reclassified as securities.

**General Rule:** STOs that are considered securities are subject to the registration and disclosure requirements of the **Securities and Exchange Act**. This typically entails filing a prospectus, providing audited financial statements, and undergoing a review process similar to traditional public offerings.

**Small-Scale STO Exemption:** The FSC has provided a significant exemption for smaller STOs to foster innovation while maintaining investor protection. An STO can be exempt from the full public offering requirements if it meets specific conditions:

**Total Offering Amount:** The total offering amount does not exceed **NTD 30 million** (approximately USD 1 million, subject to exchange rate fluctuations).

**Number of Investors:** The offering is limited to **professional investors**, with a maximum of **30 professional investors**.

**Platform Requirement:** The STO must be issued and distributed through an FSC-licensed **securities firm** operating an STO platform.

**Filing Requirement:** Even with this exemption, the issuer must still prepare an "offering plan" and file it with the FSC through the licensed securities firm for review. This is not a complete exemption from regulatory oversight.

**Larger STOs:** Any STO exceeding the NTD 30 million threshold or targeting more than 30 professional investors (or general investors) would be subject to the full, stringent requirements for public offerings under the SEA, making them practically very difficult to conduct in Taiwan under the current framework.

Secondary trading of STOs is **only permitted on FSC-licensed "security token trading platforms."** These platforms must be operated by a securities firm licensed by the FSC to engage in such activities.

Trading is generally **restricted to "professional investors"**.

The platforms must adhere to strict rules regarding investor protection, anti-money laundering (AML), custody, trading rules, and technology security.

Custody of the STOs must be handled by an institution approved by the FSC.

**Non-Security Tokens (e.g., Bitcoin, Ethereum, most Utility Tokens):**

Trading platforms for non-security cryptocurrencies are *not* regulated under the Securities and Exchange Act by the FSC for licensing.

However, they are subject to **Anti-Money Laundering (AML)** and Countering the Financing of Terrorism (CFT) regulations. Virtual Asset Service Providers (VASPs) in Taiwan must comply with the **"Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Virtual Asset Service Providers"** and register with the FSC for AML compliance purposes.

The FSC is also working on a dedicated VASP licensing framework to further regulate these platforms beyond just AML, which is expected to introduce broader prudential and market conduct requirements.

**Anti-Money Laundering (AML) Compliance:** The most active area of enforcement has been ensuring that Virtual Asset Service Providers (VASPs) comply with AML/CFT regulations. The FSC frequently issues warnings and requires VASPs to register and implement robust AML procedures. Failure to comply can result in fines and directives to improve systems.

**Example:** In recent years, the FSC has required all virtual asset platforms to complete their AML declarations and has conducted checks to ensure compliance with identity verification (KYC), transaction monitoring, and suspicious activity reporting. Platforms found non-compliant could face administrative penalties.

**Unregistered Securities Offerings:** While specific, high-profile *crypto-native* unregistered STO cases leading to criminal prosecution might not be widely publicized, the FSC has issued strong warnings against token offerings that possess securities characteristics but have not gone through the proper registration or exemption process. Any entity conducting an STO that exceeds the small-scale exemption without proper FSC registration would be in clear violation of the Securities and Exchange Act, which carries significant legal penalties, including fines and imprisonment for responsible persons, similar to unregistered traditional securities offerings.

**Fraud and Investment Scams:** The police and other law enforcement agencies frequently investigate and prosecute individuals and groups involved in crypto-related investment scams that promise unrealistic returns, often involving Ponzi schemes or misleading marketing. While these are often prosecuted under general fraud statutes, the FSC would also step in if the tokens involved were found to be unregistered securities.

**Securities and Exchange Act (證券交易法):**

*Note: This is the foundational law for securities in Taiwan, defining what constitutes a security and outlining regulatory requirements.*

**Regulations Governing Security Token Offerings by Securities Firms (證券商經營證券型代幣業務管理辦法):**

*Note: This is the primary regulation detailing the framework for STOs, including the small-scale exemption and platform requirements.*

*Note: This governs AML/CFT compliance for all Virtual Asset Service Providers (VASPs) in Taiwan, regardless of whether the tokens are securities.*

**Financial Supervisory Commission (FSC) Website (English Section):**

*Note: The FSC website is the official source for press releases, policy updates, and further guidance related to cryptocurrency and financial regulations in Taiwan.*

**Financial Supervisory Commission (FSC):** The primary financial regulator in Taiwan responsible for overseeing financial institutions and has extended its oversight to VASPs regarding AML/CTF.

**Regulations Governing Anti-Money Laundering and Countering Terrorism Financing for Virtual Asset Service Providers (虛擬通貨平台及交易業務事業防制洗錢及打擊資恐辦法)**

Issued by the FSC, effective July 1, 2021.

**URL (FSC Announcement):** https://www.fsc.gov.tw/ch/home.jsp?id=96&aplistdnid=0&dfile=list&qnode=14810 (Official Chinese text. English translations are often unofficial but widely available via legal firms).

These regulations require VASPs to implement robust internal control systems for AML/CTF, report suspicious transactions, and conduct due diligence.

**Current State:** There is no specific, dedicated "digital asset custody license" in Taiwan. However, engaging in "custody or administration of virtual assets or instruments enabling control over virtual assets" is defined as a Virtual Asset Service Provider (VASP) activity under Article 2, Paragraph 4 of the VASP AML Regulations.

Therefore, any entity providing custody services is considered a VASP and must comply with the FSC's VASP AML Regulations, including registration with the FSC, establishing internal control systems, and adhering to AML/CTF obligations. This is a registration and compliance requirement rather than a comprehensive licensing regime for prudential supervision of custody specifically.

**Reference:** VASP AML Regulations, Article 2, Paragraph 4.

**Segregation of Client Assets Rules:**

**Current State:** The VASP AML Regulations (Article 11) generally require VASPs to establish internal control and audit systems, including "measures for safeguarding virtual assets." While it does not explicitly mandate precise "on-chain segregation" to unique addresses per client or legal entity, it implicitly requires systems that ensure the safety and proper management of client assets. Best practices in the industry, even without explicit legal mandate, typically involve robust measures to distinguish client assets from proprietary assets.

**Reference:** VASP AML Regulations, Article 11.

**Current State:** There are no explicit regulatory mandates for VASPs to carry specific insurance or bonding for virtual asset custody in the current VASP AML Regulations. This is an area expected to be addressed in future comprehensive legislation.

Many reputable VASPs may acquire insurance as part of their risk management, but it's not a regulatory requirement at present.

**Current State:** There is no specific legal definition of a "qualified custodian" for digital assets in Taiwan's existing regulations, similar to definitions found in traditional securities law (e.g., in the U.S.). Any entity performing custody as a VASP must comply with the VASP AML Regulations. The forthcoming comprehensive legislation is expected to address and potentially define such roles more clearly.

**Comprehensive VASP Special Law:** The FSC has publicly announced its intention to establish a dedicated and comprehensive regulatory framework for virtual assets, moving beyond just AML/CTF.

In **September 2023**, the FSC outlined its plans for a new "special law" for virtual assets, which will cover aspects such as:

**Business rules:** For token issuance and trading.

**Investor protection:** Including segregation of client assets, insurance/compensation mechanisms.

**Custody rules:** Likely to be more detailed and specific regarding security, operational resilience, and potentially the definition of qualified custodians.

The FSC indicated that it plans to complete a draft of this special law in **2024**. This new law is expected to significantly deepen the regulatory oversight of custody services, bringing them more in line with traditional financial custody requirements.

**FSC News Release (September 2023 - Chinese):** https://www.fsc.gov.tw/ch/home.jsp?id=96&aplistdnid=0&dfile=list&qnode=14810&args=AAABBBCAAAP_10&mode=&sname=&tsearch=&attrs= (Look for news releases around September 2023 regarding virtual asset supervision).

**Money Laundering Control Act (MLCA):** This act provides the overarching legal framework for AML/CFT in Taiwan. It mandates financial institutions and designated non-financial businesses and professions (DNFBPs), which now include VASPs, to implement robust AML/CFT measures.

**Legal Reference:** Money Laundering Control Act (洗錢防制法). Available on the Laws and Regulations Database of the Republic of China (Taiwan): https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?PCode=G0380088

**FSC Regulations for VASPs:** In April 2021, the FSC designated VASPs as reporting entities under the MLCA and issued the **Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Virtual Asset Service Providers (虛擬資產服務提供者洗錢防制及打擊資恐辦法)**. These regulations explicitly require VASPs to implement measures for identifying and reporting suspicious transactions, conducting customer due diligence (CDD), and complying with sanctions.

**Customer Due Diligence (CDD):** Implementing risk-based CDD measures, including identifying beneficial owners.

**Sanctions Screening:** Screening customers and transactions against relevant sanctions lists.

**Reporting:** Reporting suspicious transactions (STRs) to the Anti-Money Laundering Office (AMLO) under the Ministry of Justice Investigation Bureau (MJIB).

**Record Keeping:** Maintaining records of customer identification and transactions.

**Internal Controls:** Establishing robust internal control systems and compliance programs.

**Legal Reference:** Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Virtual Asset Service Providers (虛擬資產服務提供者洗錢防制及打擊資恐辦法). Available on the FSC website (Chinese only, search by title): https://www.fsc.gov.tw/ (Navigate to "Laws and Regulations" -> "金融法規" -> "綜合類")

**Global Financial Interconnectivity:** Taiwanese VASPs engaging in transactions with entities or individuals in jurisdictions that *do* enforce these sanctions (e.g., US, EU member states) must comply to avoid being cut off from global financial networks, losing correspondent banking relationships, or facing secondary sanctions.

**FATF Standards:** The FATF recommendations, which Taiwan adheres to, explicitly require countries to implement targeted financial sanctions related to terrorism and proliferation financing, based on UN Security Council resolutions.

**Risk Management:** Failing to screen against these internationally recognized sanctions lists poses significant reputational, operational, and legal risks for VASPs.

**OFAC (U.S. Department of the Treasury's Office of Foreign Assets Control):**

Any Taiwanese VASP handling transactions involving USD, US persons, or entities subject to US jurisdiction must comply with OFAC sanctions. This includes screening against the Specially Designated Nationals and Blocked Persons (SDN) List and other OFAC sanctions lists.

**Reference:** OFAC Sanctions List Search: https://sanctionssearch.ofac.treas.gov/

Taiwanese VASPs dealing with EU persons or entities, or operating within the EU's sphere of influence, must comply with EU restrictive measures. The EU maintains various sanctions lists.

**Reference:** European Union Sanctions Map: https://www.sanctionsmap.eu/

Although Taiwan is not a UN member, its MLCA mandates measures against individuals and entities designated by the UN Security Council for terrorism and proliferation financing. This is typically implemented through domestic lists.

**Reference:** UN Security Council Consolidated List: https://www.un.org/securitycouncil/content/un-sc-consolidated-list

**Screen Customers (KYC):** Conduct comprehensive Know Your Customer (KYC) procedures, including screening all new and existing customers against relevant sanctions lists (Taiwanese domestic lists, OFAC, EU, UN). This includes individuals, legal entities, and their beneficial owners.

**Screen Transactions (KYT):** Implement Know Your Transaction (KYT) measures to monitor crypto transactions for red flags indicative of sanctions evasion or illicit activity. This involves real-time or near-real-time screening of transaction parties and associated wallets.

**Ongoing Monitoring:** Continuously monitor customers and transactions for changes in risk profiles and new sanctions designations.

**Hit Resolution:** Establish clear procedures for handling potential sanctions "hits," including verification, freezing of assets (if required by law or international obligation), and reporting to authorities.

**High-Risk Jurisdictions:** VASPs are expected to apply enhanced due diligence (EDD) to transactions involving high-risk jurisdictions, as identified by the FATF (e.g., those on the FATF "grey list" or "black list") or other international bodies.

**Reference:** FATF High-Risk Jurisdictions: https://www.fatf-gafi.org/countries/#high-risk-jurisdictions

**Sanctioned Jurisdictions:** Transactions involving countries under comprehensive sanctions (e.g., Iran, North Korea, certain regions) by OFAC, EU, or UN regimes would be prohibited or severely restricted based on the VASP's international compliance obligations.

**Administrative Fines:** The FSC can impose substantial administrative fines on VASPs that fail to implement proper AML/CFT and sanctions compliance measures.

**Rectification Orders:** The FSC can order VASPs to rectify non-compliant practices within a specified period.

**Suspension or Revocation of Business:** For serious or repeated violations, the FSC may suspend or even revoke a VASP's business registration or license.

**Criminal Penalties:** Individuals responsible for severe AML/CFT violations, such as complicity in money laundering or terrorist financing, can face imprisonment and criminal fines under the MLCA and other relevant criminal statutes.

**Reference:** Money Laundering Control Act (洗錢防制法) - Articles 10-16 outline penalties for various offenses.

**Designated Individuals and Entities:** The **Ministry of Justice Investigation Bureau (MJIB)** is responsible for compiling and publishing lists of individuals and entities designated as terrorists or proliferators of weapons of mass destruction, based on UN Security Council resolutions and domestic investigations. Financial institutions and VASPs are required to screen against these lists and freeze funds or assets of designated persons.

These lists are typically published and updated on the MJIB website. While a direct English link to a consolidated list is not always stable, VASPs must access and utilize these official publications.

**Reference:** Ministry of Justice Investigation Bureau (MJIB) website: https://www.mjib.gov.tw/ (Look for sections related to "防制洗錢" or "指定對象").

**Partial and Evolving:** Taiwan has not issued a blanket ban, nor does it have a comprehensive, dedicated crypto-specific licensing regime for all aspects of virtual asset operations yet. The current regulation primarily treats VASPs as financial institutions for AML/CTF purposes. However, the Financial Supervisory Commission (FSC) has been actively developing a more comprehensive framework, aiming to introduce a dedicated Virtual Asset Management Act.

**Anti-Money Laundering (AML) & Counter-Terrorism Financing (CTF):** This is the foundation of current regulation.

**Investor Protection:** The FSC has increasingly emphasized safeguarding investors, especially concerning operational stability, segregation of client assets, and information security for platforms.

**Financial Stability:** Monitoring the potential impact of virtual assets on the broader financial system.

**Self-Regulation:** Encouraging VASPs to form self-regulatory organizations to set industry standards.

**Financial Supervisory Commission (FSC) (金融監督管理委員會):**

**Role:** The primary regulatory authority for virtual assets in Taiwan. It formulates policies, supervises financial markets, and is responsible for AML/CTF regulations applicable to VASPs. The FSC is leading the drafting of the future comprehensive Virtual Asset Management Act.

**Ministry of Justice (MOJ) (法務部):**

**Role:** Responsible for the overall legal framework concerning anti-money laundering and terrorism financing, including the Money Laundering Control Act, which forms the basis for VASP AML regulations.

**Central Bank of the Republic of China (Taiwan) (CBC) (中央銀行):**

**Role:** Monitors the potential impact of virtual assets, especially stablecoins, on financial stability and monetary policy. While not directly regulating VASPs, it observes the market and contributes to inter-agency discussions.

**Taiwan Virtual Asset Service Provider Association (TVASPA) (台灣虛擬資產服務事業公會):**

**Role:** A self-regulatory organization (SRO) officially established in 2024, promoted by the FSC. Its purpose is to assist in drafting industry codes of conduct, establishing standards for market practices, information security, investor protection, and promoting industry self-discipline.

**Money Laundering Control Act (洗錢防制法)**

**Date:** First enacted in 1996, significantly amended multiple times, with relevant amendments for VASPs effective around **November 2018**.

**URL (Taiwan Laws and Regulations Database - Chinese):** https://law.moj.gov.tw/LawClass/LawAll.aspx?PCode=A0030043

**Significance:** This act provides the legal basis for AML/CTF requirements in Taiwan and broadly defines the scope for financial institutions, which was later extended to virtual asset service providers.

**Date:** Promulgated by the FSC on **April 7, 2021**, effective **July 1, 2021**.

**Significance:** This is the *core* current regulation specifically for virtual asset service providers (VASPs). It mandates that VASPs must:

Establish internal control systems for AML/CTF.

Implement Customer Due Diligence (CDD) and Know Your Customer (KYC) procedures.

Report suspicious transactions to the Anti-Money Laundering Office (AMLO) under the Ministry of Justice.

Keep transaction records for a specified period.

Comply with sanctions against designated individuals or entities.

**Register with the FSC:** VASPs are required to submit an AML Statement of Compliance to the FSC.

**Upcoming: Virtual Asset Management Act (虛擬資產管理條例) (Draft)**

**Date:** The FSC announced its intent to draft this dedicated act in **September 2023**, with a goal to release a draft for public consultation in **Q3 2024**.

**Significance:** This proposed act aims to be a comprehensive regulatory framework, moving beyond just AML. It is expected to cover:

**Licensing System:** A formal licensing regime for VASPs.

**Protection of Client Assets:** Requirements for the segregation of client funds and assets.

**Information Security:** Standards for platform security and data protection.

**Listing/Delisting Rules:** Guidelines for virtual asset offerings.

**Advertising and Marketing:** Rules for promotions.

**Operational Requirements:** Enhanced scrutiny of VASP operations and governance.

**Penalties:** Clear penalties for non-compliance.

**Legal, but Regulated for AML:** Crypto trading and the operation of virtual asset exchanges (VASPs) are **not banned** in Taiwan. However, they are currently regulated primarily under the **AML/CTF framework** as described above.

**Mandatory AML Compliance & Registration:** All VASPs operating in Taiwan, whether local or foreign, are required to:

**Comply with AML/CTF regulations:** Implement robust KYC, CDD, transaction monitoring, and suspicious activity reporting.

**Register with the FSC:** Submit an AML Statement of Compliance to the FSC.

**No Dedicated Operating License (Yet):** As of early 2024, there isn't a specific "crypto exchange license" similar to a securities broker license. The AML registration is currently the main regulatory gateway. However, this will change with the proposed Virtual Asset Management Act, which will introduce a formal licensing regime.

**FSC's Oversight and Warnings:** The FSC frequently reminds the public of the risks associated with virtual asset trading (e.g., price volatility, cybersecurity risks, fraud) and emphasizes that VASPs are currently not regulated as traditional financial institutions. They are pushing for enhanced self-regulation through the TVASPA to bridge the gap until the comprehensive act is in place.

**Focus on Local Operations:** The FSC has particularly focused on ensuring that any VASP offering services to Taiwanese citizens adheres to the local AML regulations, regardless of where the VASP is domiciled.