Crypto-funded debit card in Taiwan

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.

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

Exchange between virtual assets and fiat currencies.

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.

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

Segregation of Client Assets Rules:

VASP Guidelines (Safeguarding Client Assets): However, if a VASP offers custody services for stablecoins or holds fiat assets on behalf of clients (which might include funds used to back stablecoins), the "Guidelines for Virtual Asset Service Providers" issued by the FSC mandate that VASPs must:

Segregate client assets from their own proprietary assets.

Safeguard client assets appropriately, often through trust arrangements or full deposit insurance for fiat.

E-money Tokens: Stablecoins pegged to fiat currency and intended for payments could be regulated similarly to e-money.

Future Outlook: It is highly anticipated that a future stablecoin framework would introduce specific licensing requirements for stablecoin issuers, potentially requiring them to be licensed financial institutions or obtain a specialized license.

Gains from the sale of cryptocurrencies are considered "Other Income" (其他所得) under Article 14 of the Income Tax Act.

Businesses Selling Cryptocurrency: The direct sale of cryptocurrencies by a business might be subject to Business Tax (VAT) at the standard rate of 5% if it's considered a sale of goods or a taxable service. However, there's ongoing debate and lack of absolute clarity on whether cryptocurrency itself is a "good" or "service" for direct VAT application.

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.