Taiwan’s Financial Supervisory Commission (FSC) plans to launch a pilot program allowing local banks to offer virtual asset custody services, local news outlet Central News Agency reported on Tuesday, 8 October 2024.
The initiative is expected to launch in the first quarter of next year. It aims to provide a regulated framework for banks to safely manage and store digital assets like Bitcoin and Ethereum for clients. Currently, three banks have shown interest in participating in the trial.
The FSC, which oversees Taiwan’s virtual asset industry, is also preparing to introduce a draft special law by the end of this year. This new legislation will establish clear regulatory guidelines to ensure a stable environment for the growth of the digital asset industry.
FSC To Set Up 15-Day Comment Period
At a recent press briefing, Hu Zehua, the Director of the FSC’s Comprehensive Planning Division, outlined the process for the trial.
He explained that before financial institutions can begin offering virtual asset custody services, the FSC will release detailed information to the public for a 15-day comment period.
This process aims to gather feedback and refine the program’s guidelines before officially accepting applications. Hu expects the first application to appear in early 2024.
The Taiwan Financial Supervisory Commission is advancing plans to trial virtual asset custody services, aiming to foster innovation within the financial sector.
Three private banks have already shown interest, with the first trial applications anticipated by the first quarter… pic.twitter.com/SsXeUMwMER
— Coinnewsnow.com (@CoinnewsnowCom) October 9, 2024
Interest in the pilot program stems from the potential of virtual asset custody services to cater to various market participants, including virtual asset exchanges and institutional investors.
While some securities firms initially showed interest, concerns about their smaller capital reserves led the FSC to favor banks within the same corporate groups, given their stronger security capabilities.
Hu told the outlet that the custody of virtual assets demands a high level of security, given the significant value these assets can hold, often amounting to millions of yuan.
Furthermore, Hu said that the FSC places a strong focus on security in this pilot. He highlighted the importance of implementing measures to prevent money laundering.
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Banks Need To Define Which Cryptos They Will Manage
The guidelines set by the FSC require banks applying for the trial to clearly define the types of digital assets they will manage, such as Bitcoin, Ethereum-based tokens, and others like Dogecoin.
Additionally, banks must specify their target clients -whether they are virtual asset platforms, institutional investors, or general retail investors.
Many foreign banks initially focus on serving exchanges before gradually expanding to institutional clients. Hu noted that extending services to retail investors is less common due to the added security challenges.
The initiative comes shortly after Taiwan’s FSC unveiled updated Anti-Money Laundering (AML) regulations. The main objective is to boost the oversight of local virtual asset service providers (VASPs).
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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