Centralized exchange in Taiwan

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

Guiding Principles for Management of Virtual Asset Service Providers (2023) — VASP registration and conduct guidelines (being formalized into law, expected 2025-2026)

VASP: VASP Registration under FSC guidelines (3-6 months). Dedicated VASP law under legislative review. Approach influenced by Japan and Singapore models. MaiCoin and BitoPro are major local players.

CUSTODY: Customer asset segregation required under FSC guidelines

EXCHANGE: VASP registration with FSC; information security management required. Self-regulatory organizations among exchanges. Stablecoin framework under development.

Registration and Status: Over 16 VASPs have been approved since March 2024, with the FSC committing to initial feedback within 6 weeks and decisions within 6 months, though actual timelines vary.

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.

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.

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.

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.

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.

Capital requirements: For VASPs.

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.

Travel Rule adopted — threshold: TWD 50,000

Entity Targeted: David Pan (潘奕hofer), founder of ACE Exchange, and approximately 10 other individuals. Violation Type: Fraud, money laundering, operating an illegal pyramid scheme, organized crime. The group allegedly used fake tokens (NFTC, MOCT) to defraud investors out of hundreds of millions of New Taiwan Dollars. 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. 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.

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.