Taiwan Paves Way for The Use of Bitcoin and Other Cryptocurrencies
Taiwan has decided not to join China and South Korea’s league in outright banning of cryptocurrencies. In the past, Taiwan had issued public warnings about the risks associated with using and trading bitcoins and other digital currencies. While Taiwan people won’t find ATMs for bitcoins in this country, as it is considered to be illegal, they can still buy, sell and trade bitcoins and other cryptocurrencies.
Wellington Koo, the chairman of Taiwan’s Financial Supervisory Commission has promised to change Taiwan’s perspective about bitcoins and other virtual currencies and adopt a more positive approach to develop a legal framework for adopting blockchain technology.
Taiwan’s Efforts in Making Bitcoin and Other Cryptocurrencies Legal and regulating these Virtual Currencies
The Financial Technology Innovation Experimentation Act’ bill, that was proposed by Executive Yuan right after Koo’s pledge to adopt blockchain technology, and later approved by the Legislative Yuan, made it possible for experimenting creative and ingenious financial technology under less strict and rigid legal conditions. The passing of this bill has opened up new opportunities for FinTech startups that deal with blockchain technology and cryptocurrencies.
The legality and regulation of bitcoin and other cryptocurrencies in Taiwan is a little different from other nations where these virtual currencies are strictly regulated. Unlike many other countries where virtual currencies are strictly monitored and regulated, in Taiwan, the blockchain technology will be decontrolled. This unique approach that Taiwan is planning to take with respect to regulating virtual currencies like Bitcoin and ether, has given rise to new ways of fundraising that could be powered by virtual currencies. So FinTech startups and firms don’t have to only rely on the limited funding, instead, they can use blockchain technology for fundraising. This is exactly the opposite of what China and South Korea have done with respect to bitcoin exchanges. These two nations have banned all Initial Coin Offerings (ICO) and have deemed it as an illegal payment method.
Taiwan’s Financial Supervisory Commission is in charge of regulating bitcoins and other virtual currencies. FSC’s Regulatory Sandbox promises to give financial technology institutions or FinTech firms an opportunity to experiment with new innovative ideas. The experimentation opportunities will help FinTech firms to speed up the process of developing new financial services especially since the regulations for the tests that would be conducted during the development process would be more relaxed. This Taiwanese regulatory sandbox has now been renamed to Financial Innovation in Science and Technology.
The FSC also created a legal body or association that would have a more conducive approach towards the innovation of new financial services. Cathay Financial Holdings, Fubon Financial, KGI, MegaBank, CTBC Bank and Taishin are the members of this association. While the Taiwanese regulatory sandbox has relaxed regulatory rules on certain tests that are conducted, it gives regulatory authorities full power and control to stop financial experiments that are considered hazardous to financial customers.