Taiwan Could Become the Next Major Hub for Cryptocurrency
After years of hesitation, Taiwan is slowly shifting toward liberalizing its approach to cryptocurrency. Recent developments suggest the tiny Asian state is looking to nurture the nascent industry rather than impose restrictions like the ones seen in neighboring China.
Taiwan’s Shifting Landscape
Numerous reports over the last six months have shown willingness on the part of Taiwanese regulators to approach cryptocurrency with open arms. One of the key turning points occurred in October when Financial Supervisory Commission (FSC) Chairman Wellington Woo told Parliament that crypto and blockchain are opportunities that shouldn’t be passed up.
This sentiment was echoed by Congressman Jason Hsu, who said Taiwan should work to realize the potential of cryptocurrency. He also disagreed vehemently with any view that Taiwan should clamp down on digital assets just because China and South Korea had negative views about certain aspects of the market.
“Just because China and South Korea are banning, doesn’t mean that Taiwan should follow suit – there is a huge opportunity for growth in the future. We should emulate Japan, where they treat cryptocurrency as a highly regulated, highly monitored industry like securities,” he said.
Koo’s statement laid the foundation for the eventual passing of the Financial Technology Innovation Experimentation Act two months later. The Act aims to nurture domestic fin-tech startups by helping them avoid the same regulations that apply to incumbent firms. Crypto and blockchain startups fall within the fin-tech sphere.
The act takes inspiration from the United Kingdom’s sandbox concept, which allows firms that have passed an assessment to use the program to bypass certain regulations.
Taiwan’s official stance on cryptocurrency is “neutral,” according to Ralph Jennings of Forbes, who quoted a conversation he had with a publicist close to the government’s financial regulatory arm. Though not exactly clear, this statement seems to comply with existing provisions that make it illegal to solicit money through cryptocurrency.
That said, there are calls within Taiwan’s government to prepare for a possible meltdown within the crypto sector. The most publicized warning came from Shih Jun-ji, who serves as vice present of an executive branch of the federal government.
“My government should take early actions in response to the impact of digital currencies on finance,” Shih said, according to a Google translation of an official report that appeared on the Executive Yuan website in February.
At $10,000 per coin, bitcoin’s market cap equals one-third of the country’s foreign exchange reserves, the translation also said.
A Bright Future
Although Taiwan isn’t normally considered a major center for crypto investing, the country is home to a 25,000-strong blockchain community. There are a few active exchanges operating domestically, including MaiCoin, which predominantly serves the local community.
Despite being officially neutral on cryptocurrency, Taiwan is setting itself up for a very bright future in the sector. The sandbox model may have been inspired by the U.K., but its implementation in Taiwan is unprecedented. Adding to the excitement is the fact that the sandbox can run for up to three years. That’s three years in which startups can develop their product without the barriers of existing regulation.
The more we learn about Taiwan’s sandbox concept, the more promising it sounds. According to the Taipei Times, the FSC will decide whether a submission is sandbox-worthy within 60 days. Approved concepts would be given an 18-month window to launch trial runs of their product or service. This window can be extended for up to 36 months.
You may not hear much about the regulatory shifts underway in Taiwan, but this tiny jurisdiction is paving the way for an exciting future for all things fin-tech and blockchain.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.