The Commission for Financial Supervision in Taiwan has issued a directive regarding cryptocurrency to its banking industry. The directive requires banks not give merchant status to VASPs. This is to prevent credit card holders from purchasing crypto with their cards. This is an effective ban across the island.
Per reports by the local media on 21st July, the FSC sent a letter to the Association of Taiwanese banks in early July. The letter was a reminder to members that virtual assets were risky and speculative in nature. The flow of cash is challenging and complex, making transaction monitoring difficult.
The regulatory body also stated categorically that credit cards are payment tools for consumers and not investment tools. If these were to be used in wealth management and the purchase of speculative instruments, long-term results couldn’t be predicted.
According to the FSC letter, banks have three months to adjust to and enforce required guidelines in three months. After the three-month period, every bank’s audit department has to review compliance and send in results to the regulatory body. This is by no means the first instance of the FSC acting decisively to prevent crypto trading using credit cards. This body has also been very vocal in expressing skepticism about crypto and related activities. The FSC also put out many press releases to make the public aware of crypto and virtual assets risks.
In 2021 July, Taiwan put stringent Anti Money Laundering laws into place based on recommendations made by the Financial Task Force. Currently, Taiwan is working on the 2nd stage of a CBDC program. Under this program, select Taiwanese banks will be able to distribute CBDC to interested consumers.