Many people mistakenly believe that cryptocurrency operates in a legal vacuum in Taiwan. This is entirely incorrect.
In reality, Taiwanese law already provides over 80% coverage for cryptocurrency regulations. The framework is largely in place, with just one final piece of the puzzle remaining to be implemented—and that moment is now arriving.
The Ministry of Digital Affairs (moda) was officially established on August 27, 2022. Minister Audrey Tang stated that its goal is to act as a "motor" (mòda) for Taiwan's digital industry, accelerating digital development for both the government and private sector. With the establishment of this digital engine, we can now address a crucial question for Taiwan: how should cryptocurrency be managed?
The regulation of the cryptocurrency industry is awaiting its final piece:
Certain cryptocurrency operations possess strong financial attributes, including public deposit-taking, security token offerings, futures, options, and margin trading. These are already regulated under Taiwan's Banking Act, Securities and Exchange Act, and Futures Trading Act, with the Financial Supervisory Commission (FSC) as the overseeing authority. However, the portion categorized under "virtual commodities" currently lacks a designated regulatory body. This is the final missing piece.
With the official launch of the Ministry of Digital Affairs, Taiwan's digital governance infrastructure is nearly complete. Taiwan is now prepared to provide legal, managerial, and industrial policy responses based on the latest industry developments, ready to advance into the realms of cryptocurrency, blockchain, and Web3. Simultaneously, the highly speculative nature of cryptocurrency, its price volatility, and its continued misuse by criminals for illicit activities are leading to a growing number of investor and user victims. The timing is now ripe to place this final piece of the puzzle.
The Role of the Ministry of Digital Affairs
First, it's important to understand that the Ministry of Digital Affairs does not oversee nationally特许 (special permit) industries (such as finance and insurance, which involve licensing and regulation). It has inherited some functions from the Industrial Development Bureau of the Ministry of Economic Affairs under its newly formed Administration for Digital Industries (ADI). Consequently, the following business units within ADI are closely related to cryptocurrency and the metaverse:
- Policy Planning Division: Research and proposal for the formulation and amendment of laws and regulations related to digital economy industries.
- Emerging & Cross-Domain Division and Digital Service Division: Planning and execution for the development of emerging cross-domain, software, and information-related industries; other matters concerning the promotion and management of digital service industries.
In the future, regarding特许 industries and financial licensing matters, the Ministry of Digital Affairs will not position itself as a direct regulator. Instead, it will focus on shaping industrial policy, researching legal amendments, and managing specific regulatory aspects (such as third-party payment services and standardized contracts for online retail transactions) from the perspective of digital economic industry development.
Therefore, it is clear that the Administration for Digital Industries will play a significant role in the cryptocurrency and metaverse spaces.
A Concrete Plan for Cryptocurrency Management
Here is a proposed blueprint for Taiwan's cryptocurrency management framework. Future regulation and oversight should be based on different industry characteristics and risk management, divided into four main categories:
- 特许 Financial Businesses: For cryptocurrency activities involving特许 businesses and licensed industries—including derivative financial products, security tokens, and public fundraising—the current legal framework should be maintained. The FSC will continue to provide high-intensity supervision.
- Anti-Money Laundering (AML): Overall anti-money laundering and counter-terrorism financing (CFT) for the cryptocurrency industry should remain under the unified regulation of the FSC and the Ministry of Justice. This is to prevent the misuse of cryptocurrency for money laundering and other crimes.
- Non-特许 Businesses: For digital platform industries providing services like commodity-type trading, custody, and exchange matching—which are not特许 businesses and do not involve financial or financing attributes—it is recommended that the Administration for Digital Industries under the Ministry of Digital Affairs or related units under the Ministry of Economic Affairs become the primary governing bodies. Their role would be to safeguard the rights and interests of digital service users/consumers (e.g., through standardized contract templates) and collaborate with relevant industry associations to enforce self-regulation and crime prevention.
- National Industrial Strategy and Legislation: The Ministry of Digital Affairs should propose a "Cryptocurrency/Metaverse Development White Paper" and lead the research and proposal for the formulation and amendment of relevant industry laws and regulations.
Conclusion
Although the market may be in a prolonged bear phase, we are at a critical early stage in the development of blockchain technology, cryptocurrency, and the metaverse. By balancing risk management with industrial growth, implementing a分流 (separated) approach of financial supervision and industrial management, and fully enforcing anti-money laundering measures, we can create a robust environment. I believe that once this final piece is in place, Taiwan has the opportunity to become a leading power in software technology services for the cryptocurrency and metaverse industries.
The original article is republished with permission from the "Mr. Shell" fan page.
Disclaimer: The article represents only the author's personal views and opinions. It does not represent the views or立场 of Chainee. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions. The author and Chainee will not bear any responsibility for direct or indirect losses formed by investor transactions.
Editor: Chao Ge
Frequently Asked Questions
Is cryptocurrency legal in Taiwan?
Yes, cryptocurrency is legal in Taiwan. A significant portion of cryptocurrency activities, especially those with financial attributes, are already regulated under existing laws like the Banking Act and Securities Exchange Act. The regulatory framework is being completed.
Who regulates cryptocurrency in Taiwan?
Currently, the Financial Supervisory Commission (FSC) regulates aspects related to securities, futures, and banking activities within crypto. The Ministry of Justice handles anti-money laundering. The final piece involves appointing a body, likely under the Ministry of Digital Affairs, to oversee "virtual commodity" aspects and consumer protection. For the latest on regulatory developments, you can explore more strategies.
What is the role of Taiwan's Ministry of Digital Affairs in crypto?
The Ministry of Digital Affairs, through its Administration for Digital Industries (ADI), is expected to focus on industrial policy development, legal amendment research, and managing non-financial aspects of digital assets. This includes safeguarding user rights and promoting industry self-regulation, rather than direct financial licensing oversight.
How are cryptocurrency exchanges treated under Taiwanese law?
Exchanges dealing with security tokens or derivatives fall under FSC oversight. Those handling pure "virtual commodities" await clear designation under the new framework, which will likely focus on consumer protection, anti-money laundering compliance, and operational standards through industry collaboration.
What is the biggest legal challenge for crypto in Taiwan?
The primary challenge has been finalizing the regulatory classification and oversight for non-financial cryptocurrency services ("virtual commodities"). The establishment of the Ministry of Digital Affairs is a key step towards resolving this and providing comprehensive legal clarity.
Are crypto profits taxed in Taiwan?
Yes, profits from cryptocurrency transactions are generally subject to income tax in Taiwan. The specific classification (e.g., as personal income or based on frequency of trading) can affect the tax treatment, and it's advisable to consult with a tax professional for individual circumstances. To understand how to manage these obligations effectively, consider to get advanced methods.