TBW 2024｜Taipei Mayor Chiang Wan-an discusses the city's vision: to become a global leader in AI and blockchain technology

The 2024 Taipei Block Chain Week (TBW 2024) opened today (12/12), from the first "Bridge" to bridge Taiwan's Block Chain with the world, to the second "Scale" to become a 5,000-person conference, and this year's "Onboard" focuses on the landing of Block Chain applications. For the annual Taiwan Block Chain Event, Taipei Mayor Jiang Wan'an also took the stage to deliver a speech, emphasizing the Taipei Municipal Government's support for emerging technologies.

Taipei Mayor Jang Wan-an talks about the technology vision

Taipei City is actively promoting a five-year + 1 billion budget for smart city innovation, encouraging municipal government agencies to adopt AI technology, promote cross-departmental collaboration, and create more smart city application cases.

Chiang Wan-an said that Taipei's vision is to become a global leader in AI and Blockchain technology. He hopes to provide a platform for young people to unleash their potential and accelerate Taiwan's development as an innovation hub in Asia. At the same time, the city government is committed to digital transformation and hopes to collaborate with industries to make Taipei a center of openness and innovation in technology.

Chairperson Tsai Yuling of the Financial Technology Association elaborates on the full picture of Taiwan's regulation.

In the same event, Tsai Yu-ling, Honorary Chairman of the Taiwan FinTech Association, comprehensively analyzed the regulatory blueprint for Virtual Asset Service Providers (VASPs) in Taiwan. As a consultant to the Taiwan Virtual Asset Association preparatory group, she detailed the latest developments and strategies for the supervision of virtual assets in Taiwan.

Cai Yuling pointed out that Taiwan has adopted a phased regulatory strategy, aiming to create a favorable development environment for the virtual asset industry while protecting the rights and interests of investors. This strategy can be summarized as the following key stages:

Phase 1: Establishing Anti-Money Laundering (AML) Measures

In November of this year, Taiwan officially passed amendments to the Anti-Money Laundering Act, bringing VASPs and third-party payment platforms under regulation and imposing detailed penalties. Compared to the previously declared process of compliance with the Anti-Money Laundering Act, this is a clearer approach.

Phase 2: Industry Cooperation and Self-disciplinary Standards

Cai Yuling emphasized that the key to the second phase is to bring industry participants together to jointly formulate self-discipline norms. The Taiwan Virtual Currency Association played a crucial role in this phase, organizing industry representatives to discuss and formulate industry standards.

Taiwan's virtual asset self-regulation standards were publicly released at the end of November, with detailed specifications for investor protection, asset security, internal governance, and information transparency. For KOLs and the media, there are also stricter requirements for content regulation and risk disclosure. According to Tsai Yuling, self-regulation is not only the regulatory language formulated by the industry, but also approved by the government, thus eliminating government concerns.

Phase 3: Implementation of the Operator Registration System

The latest regulations in Taiwan require that Virtual Asset Service Providers (VASPs, Note) must register officially when operating in Taiwan. Operators who are not registered may face a maximum of two years in prison and a fine of 5 million. The purpose of this phase is to ensure that all service providers are included in the regulatory framework, improving the overall transparency and reliability of the industry.

Meanwhile, the Taiwan Financial Supervisory Commission continues to conduct financial inspections on VASP. This year, MaiCoin, BitoEX, Rybit, and ACE have been fined, indicating that regulation is tightening.

Note: VASP includes exchanges, exchange platforms, custodians, asset transferors, and underwriters, etc.

Phase Four: Establishing the Basic Regulatory Framework

At this stage, the Taiwan FSC begins to draft regulations related to virtual assets, laying the foundation for future comprehensive supervision, with a focus on establishing basic compliance requirements and regulatory principles.

Crypto City previously reported that Financial Supervisory Commission Chairman Peng Chun-lung revealed that the special law for virtual asset management is expected to be submitted to the Executive Yuan in June 2025 to begin the legislative process.

What are the guidelines for Virtual Asset Service Providers (VASPs)?

Cai Yuling elaborated on the specific requirements for VASPs. First, all VASPs must join the Taiwan Virtual Currency Association, which helps establish industry self-regulatory rules and comprehensive information security management systems to protect customer data and asset security.

VASPs also need to set up trust accounts to ensure the secure isolation of customer funds and establish detailed customer protection policies, including complaint handling mechanisms and asset tracking procedures, and implement strict Know Your Customer (KYC) processes to prevent money laundering and illegal transactions.

Taiwan's virtual asset custody business will begin trial operation next year.

In addition to regulatory norms, Tsai Yuling also mentioned that from January to April 2025, the FSC will begin to pilot the 'virtual asset custody business', and the custodian is not limited to VASP. Financial institutions (fintech companies) can also apply for registration, and some regulatory focus points are mentioned:

Custodial service providers need to register differentially based on the degree of asset control.

A sound asset reconciliation mechanism must be established.

It is necessary to formulate clear customer asset protection policies.

Cai Yuling: Optimistic about the regulation of Taiwan, gradually improving

Cai Yuling is optimistic about the future of Taiwan's virtual asset industry. She emphasized that the current regulatory framework is an evolving process, and the government and the industry will continue to cooperate to continuously improve the regulatory system. Taiwan is trying to find a balance between risk management and industry innovation, striving to establish a regulatory environment that not only protects investors but also encourages technological innovation. Through a phased and collaborative regulatory approach, Taiwan hopes to set a benchmark in the global virtual asset regulatory field, demonstrating regulatory wisdom that combines openness and prudence.

(This article is authorized to be reproduced from Crypto City)

This article TBW 2024｜Taipei Mayor Chiang Wan-an talks about the city's vision: to become a global leader in AI and Blockchain technology. Originally appeared in Chain News ABMedia.