Featured image from Unsplash.com, chart from TradingView.com
Taiwan’s financial watchdog is reportedly considering testing institutional crypto custody services, evaluating local banks for a pilot program.
Taiwan wants to integrate crypto assets into its economy
Taiwan’s financial regulator, the Financial Supervisory Commission (FSC), is reportedly encouraging local banks to experiment with digital asset custody services.
In the first quarter of 2025, the regulator plans to collect applications from interested financial institutions eager to try out digital asset custody services. Three banks have already shown interest in participating in the pilot project.
Sources close to the matter suggest that financial institutions wanting to participate in the trial will have to specify which type of digital asset they want to hold, such as Bitcoin (BTC), Ether (ETH) or Dogecoin (DOGE). others.
Given the significant amount of funds in the industry – currently over $2.2 trillion in total market capitalization – several security-related guidelines have been issued that interested institutions must adhere to.
For example, relevant institutions should share their target group of users, including professional investors, general investors, digital asset entities, etc. They should also ensure efficient security infrastructure and implement mechanisms to prevent money laundering.
In addition, participating institutions must have security mechanisms in place to avoid coming into contact with digital assets from illegal sources. Failure to do so could result in their cryptocurrency asset portfolios being damaged seized by government agencies.
According to the report, Hu Zehua, director at FSC, noted that the regulator is considering releasing further information about the trial at least 15 days before applications are accepted. In addition, the FSC wants to gather public feedback on the proposed trial and adjust the process accordingly.
Recent regulatory developments in Taiwan indicate that the island country is steadily warming up to digital assets. For example, on September 30, the FSC approved institutional investors to invest in foreign crypto exchange-traded funds (ETFs) through a reallocation process.
Crypto ecosystem is maturing in Asia
Taiwan’s recent embrace of digital assets reflects its growing significance as a powerful industry boosting national economic prospects. However, it is not the only country in Asia taking a pro-crypto stance.
This is said to be neighboring Japan considering an overhaul of existing digital asset regulations, which could potentially lead to lower taxes on crypto profits and the approval of ETFs.
Another Asian crypto heavyweight, the United Arab Emirates (UAE), recently announced that all conversions and transfer transactions of digital assets will be exempt from value added tax (VAT). The move is seen as an attempt by the UAE’s financial regulator to attract crypto capital to the country.
However, concerns remain among financial watchdogs about the potential risks of crypto assets for retail investors. A recent one report found that nearly 70% of South Korean crypto exchanges were unable to return user funds after shutting down operations. BTC is trading at $62,303 at the time of writing, down 0.1% in the past 24 hours.
