Taiwan strengthens crypto regulations to stop fraudulent activities

On November 2, Taiwan officially tightened anti-money laundering (AML) policies targeted at crypto exchanges, requesting exchanges to monitor and prevent any illegal transaction processed using digital assets.

One of the five branches of the Taiwanese government, Financial Services Commission,  now has authority over crypto exchanges to ban transactions suspected of being tied to fraudulent operations. This regulation was drafted by the Money Laundering Control Act and Terrorism Financing Prevention Act.

Based on its recently passed AML bill and the stance of the country’s main financial watchdog towards the cryptocurrency sector, Taiwan is likely leaning towards regulating its local cryptocurrency and blockchain space to prevent fraudulent operations and criminal activities using cryptocurrencies.

Did China have any impact on the new AML bill?

China and Taiwan have a complicated relationship. Although Taiwan claims to be the legitimate government of China, the loss of Hainan in 1950 limited the jurisdiction of the Taiwanese government to Taiwan and its two outlying islands Quemoy and Matsu.

One of the few common areas the government of Taiwan and China agree on is the prevention of money laundering through the utilization of electronic payment systems including cryptocurrencies.

Recently, in an attempt to completely ban money laundering efforts and fraudulent activities in the global cryptocurrency sector, the government of Japan also called for the establishment of standardized AML regulations regarding cryptocurrencies. The ban included cryptocurrencies like Monero, Zcash, and Dash. An FSA official stated on October 24:

“It should be seriously discussed as to whether any registered cryptocurrency exchange should be allowed to use such currencies. It’s nearly impossible for Japan to handle the problem alone. Even if trade is restricted to only domestic transfers or monitoring is enhanced, it’s still not enough to counter money laundering. It would be best if all the group of 20 industrial and emerging nations and regions (G20) would take the same steps toward prevention.”

Over the past several months, led by Taiwan legislator and congressman Jason Hsu, the government of Taiwan shows a more proactive and open-minded approach towards regulating the local cryptocurrency market.

In an interview, Hsu explained that a parliamentary coalition had been formed in Taiwan to focus on regulating blockchain and crypto with a set of guidelines targeted at cryptocurrency exchanges. Hsu added that Taiwan is set to cooperate with Japan, South Korea, Singapore, Hong Kong, and other Asian countries to facilitate the growth of the local cryptocurrency space.

Jason Hsu stated that :

“We have set up a parliamentary coalition in Taiwan’s parliament for blockchain, which is a bipartisan alliance designed to help support the industry. I have also launched self-regulatory organizations for blockchain and crypto, where we are working together to come up with a set of guidelines to regulate exchanges. These guidelines will provide basic parameters as to how crypto exchanges and other taxations are defined. When we announce the guidelines in the coming weeks, it will be a regional consensus with Taiwan, Japan and Korea, Singapore, Hong Kong as well as other Asian countries.”

China too is protective of crypto; only to a certain limit

China officially banned cryptocurrency trading in September 2017, expressing concerns towards money laundering and capital controls. The government has limited the outflow of the Chinese Yuan to overseas markets for decades..

As Cointelegraph extensively reported, the government actively banned nearly every area in the cryptocurrency sector including events, media, and over-the-counter (OTC) trading, requesting AliPay, the country’s most widely utilized fintech application to block any transaction that is suspected of being connected to cryptocurrency exchanges.

However, on Oct. 25, 2018 the Shenzhen Court of International Arbitration officially stated that under local regulations, cryptocurrencies like Bitcoin and Ethereum are considered properties and as such, holding or transferring Bitcoin is not illegal in China.

Japan and South Korea, as two of the largest cryptocurrency markets, demonstrate significant progress in terms of regulation and industry growth.

To compete against the four markets, Taiwan would have to establish a strong selling point to attract cryptocurrency exchanges and blockchain-related businesses.

What do you think about the recent regulation by Taiwan? Do let us know in the comments section.

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