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Key Takeaways:
Government Approval and Industry Collaboration: Taiwan’s Ministry of the Interior approved the formation of the association, which involves 22 crypto firms. This collaboration aims to establish self-regulatory norms and ensure compliance with government guidelines, focusing on investor protection and operational reliability.
Emphasis on Consumer Protection: The Financial Supervision Commission has emphasised consumer protection in its industry guidelines. The new association will help implement these guidelines by creating self-supervisory rules that separate customer assets from exchange assets and reviewing mechanisms for listing and delisting digital assets.
Step Towards Comprehensive Regulation: The formation of this association represents a significant move towards a more regulated and secure crypto market in Taiwan.
Taiwan has taken a step towards fostering a robust and compliant cryptocurrency industry by establishing an association aimed at helping crypto firms self-regulate.
On June 13 2024, XREX exchange revealed that 24 crypto firms became the founding members of the Taiwan Virtual Asset Service Provider (VASP) Association. According to the report, BitPro founder and CEO Titan Cheng will chair the association and XREX chief revenue officer Winston Hsiao will be the vice chair.
The group stated its dedication to “advancing and enabling strict yet equitable regulations that support the global expansion of the blockchain finance industry.” As an association member, XREX, said, “ [We will] cooperate with the government, the Ministry of Justice and law enforcement agencies to jointly combat fraud and other criminal activities.”
XREX added, “The industry will also contribute technology, industrial knowledge and infrastructure to jointly establish an industrial joint defence platform and design international transfer rules that meet Taiwan’s needs (Travel Rule) standards, networks and alliances, to create currency flow scanning and tracking technology that is consistent with Taiwan’s money laundering and fraud patterns.”
This initiative is expected to streamline regulatory processes, enhance transparency, and ensure the protection of investors. The formation of this association underscores Taiwan’s commitment to nurturing a safe and innovative environment for the burgeoning crypto sector.
The Birth of the Self-Regulation Association
Establishing the Taiwan Crypto Self-Regulation Association (TCSRA) marks a crucial moment in the country’s approach to crypto regulation. The association was launched with the support of both private sector stakeholders and government bodies, signalling a collaborative effort to address the challenges posed by the rapidly evolving crypto landscape. The primary objective of TCSRA is to develop a framework that promotes best practices, ensures compliance with existing regulations, and preempts potential issues that could arise from the industry’s growth. TCSRA’s foundation is built on transparency, accountability, and innovation. By creating a unified body representing crypto firms’ interests, the association aims to foster a cooperative spirit among industry players.
This initiative is expected to bridge the gap between regulators and businesses, facilitating a more effective regulatory environment that can adapt to the dynamic nature of cryptocurrencies. The association’s membership is open to all crypto-related businesses in Taiwan, including exchanges, wallet providers, and blockchain developers. By joining TCSRA, these entities adhere to a code of conduct that emphasises ethical business practices, consumer protection, and compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. The VASP association was formed after officials from Taiwan’s Ministry of Justice suggested amending the country’s AML regulations for virtual asset service providers.
Enhancing Regulatory Compliance and Investor Protection
One of TCSRA’s core functions is to enhance regulatory compliance among its members. The association will guide adhering to local and international regulations, ensuring that crypto firms operate within the legal framework established by Taiwanese authorities. This proactive approach aims to reduce the regulatory burden on individual firms while maintaining high compliance standards across the industry. To achieve this, TCSRA will develop and disseminate best practice guidelines that cover various aspects of crypto operations, including security measures, risk management, and customer due diligence.
These guidelines will be regularly updated to reflect the latest regulatory changes and emerging threats, ensuring members remain well-informed and prepared to tackle any challenges. TCSRA will be crucial in protecting investors. The association will implement mechanisms to resolve disputes between crypto firms and their customers, providing a transparent and impartial platform for addressing grievances.
This will help build trust in the industry and reassure investors that their interests are safeguarded. TCSRA will also conduct regular audits and assessments of its members to ensure adherence to the established standards. Non-compliant firms may face penalties or expulsion from the association, reinforcing the importance of maintaining ethical and lawful operations. Through these measures, TCSRA aims to create a secure and trustworthy environment for businesses and investors.
Fostering Innovation and International Collaboration
While regulatory compliance and investor protection are paramount, TCSRA also recognises the importance of fostering innovation within the crypto industry. The association will be a hub for knowledge sharing and collaboration, enabling members to stay abreast of technological advancements and industry trends. This will be facilitated through regular workshops, seminars, and conferences that bring together experts from several fields to share insights and best practices. TCSRA will also establish partnerships with international organisations and regulatory bodies to promote cross-border cooperation and harmonisation of standards.
These collaborations will help Taiwanese crypto firms expand their reach and compete globally while adhering to consistent regulatory frameworks. Moreover, TCSRA will advocate for policies that support innovation and growth within the crypto sector. This includes engaging with policymakers to shape regulations that balance the need for oversight with the industry’s potential for economic development. By providing a unified voice for the crypto community, TCSRA will ensure that the interests and concerns of its members are adequately represented in policy discussions.