Taiwan intends to tighten digital asset regulations by introducing a bill aimed at criminalizing digital currency crimes and imposing stiffer fines and prison terms.
The new bill targets VASPs serving Taiwanese investors and calls for stricter regulation to root out fraud and money laundering. was suggested At the request of the Ministry of Justice and with support from the Taiwanese government, it will head to the Legislative Yuan within a few weeks.
Financial regulators in the East Asian country do not intervene in the industry, giving VASPs a high degree of autonomy. In March, the Home Office approved VASP’s application to establish an industry association that would play a key role in developing the regulatory framework.
Taiwanese VASPs only had to comply with the AML regime introduced by the Financial Supervisory Commission in 2021 and pay taxes.
This could change with new legislation. While reiterating the need to adhere to strict AML and financial crime prevention measures, it also extends to new areas such as cybersecurity.
Importantly, the proposed bill would change digital currency crimes from civil to criminal offenses. Previously, VASP had been sued in civil cases and settled financially. At best, the company faced closure.
Under the new bill, authorities could charge offenders with criminal offenses, which would carry higher fines and prison terms.
Operators of VASPs that are not licensed or do not meet national standards risk up to two years in prison and fines of up to $1.5 million. Traders who use third-party accounts to launder money could face up to five years in prison.
The bill also requires offshore VASPs to establish local companies to serve Taiwanese investors.
Over the past year, Taiwanese authorities have been dealing with an increase in digital asset crime. Earlier this year, authorities arrested the operators of local platform ACE Exchange, whose executives allegedly made millions of dollars by pushing worthless tokens. In December last year, a suspect was arrested on suspicion of laundering $320 million through digital assets.
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