Taiwan’s Financial Supervisory Commission is set to launch a pilot program for crypto custody services, aiming to stimulate institutional adoption of digital assets in the region. The initiative has garnered interest from three banks, with the first applications expected in Q1 2025.

Encouraging Institutional Participation

The Financial Supervisory Commission (FSC) plans to encourage financial institutions to apply for themed business trials. Three banks have already shown interest in participating in this program. Hu Ze-hua, director of the FSC’s comprehensive planning department, noted that brokerage firms were also interested. However, concerns over capital adequacy and security might lead them to partner with banks from the same group to apply for the trial.

Application Process and Target Clients

As part of the application process, financial institutions will need to specify the types of crypto they plan to hold and their target clients. Hu highlighted that foreign banks typically begin by serving crypto exchanges before expanding their services to professional and general investors.

Stricter Anti-Money Laundering Rules

The FSC aims to implement stricter anti-money laundering (AML) rules to prevent the custody of assets tied to illegal activities. Although specific details have yet to be revealed, earlier reports indicated that the FSC prepared a draft of the “VASP Registration Regulations,” set to take effect on January 1, 2025. These measures follow amendments to the AML Act made in July as part of Taiwan’s broader initiative to regulate its growing crypto sector.

Unlike previous AML regulations, the new rules will specifically target crypto-related businesses. Entities such as crypto exchanges, trading platforms, and custodians will be required to register and comply with enhanced anti-money laundering protocols. Once enacted, crypto providers will be mandated to submit annual risk assessment reports and establish internal control and audit systems.

“The FSC is committed to fostering a secure environment for crypto investments, ensuring that all participants adhere to stringent AML standards.”

This move is expected to bolster investor confidence and attract more institutional players into Taiwan’s burgeoning crypto market. Stay updated with the latest developments in the crypto world by following Global Crypto News.

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