Taiwan doesn’t ban cryptocurrency as some of its peers in Asia do, but it also doesn’t quite declare it outright legal and welcome business that deal in the likes of Bitcoin.
Lawmaker Jason Hsu says is trying to push Taiwan toward liberalization to stoke the economy as Japan and Singapore do now. To get there, he says, the island government should pass a bill, issue guidelines or write a “playbook” on what’s legal, so businesses know what to do.
“It’s still a wait-and-see approach,” Hsu told Business Next in an interview Tuesday. “The answers I got from the executive branch are a somewhat lenient approach, ‘I don’t encourage, but I don’t discourage.’ It’s kind of like a holding pattern.”
Hsu said he has talked to Taiwan’s central bank and Financial Supervisory Commission, the two agencies that would formulate a crypto-policy, about learning from Asian peers such as Singapore and Japan.
The minority Nationalist Party lawmaker is talking as well to peers in the majority Democratic Progressive Party caucus about some kind of legislation. Legislators have had several debates to date, he said, but they’re awaiting direction from the government before making any decisions.
Cryptocurrency refers to freely traded digital tokens backed by a public transaction ledger, all outside a country’s formal monetary system. It can be used to buy and sell or to save as a financial asset like stocks or other currencies.
Two Taiwan-based platforms and an estimated 25,000 local users trade cryptocurrency as some major banks develop their own schemes. Fintech startups such as a Taiwanese “cold wallet” firm are becoming more visible, as well.
Taiwan needs cryptocurrency to stoke fintech, healthcare and developments in high tech, the lawmaker said.
On March 23 parliament was scheduled to ask questions of Taiwan Premier William Lai about the government’s ambitions for cryptocurrency.
Taiwan’s Financial Supervisory Commission takes a “neutral” approach to cryptocurrency trade, a commission media liaison said this week. But the commission warned of “risks” in a statement on December 19 following price fluctuations in the crypto market.
Officials worry now about cryptocurrency taxation and prevention of money laundering, Hsu said. Traditional banks that stand to lose business may also be pressuring government to shun liberalization, he said.
But Taiwan’s current government tends to follow Japan and distance itself from China for political reasons, he said.
China is prepping to tighten regulations that ban fundraisers called initial coin offerings (ICOs) and cryptocurrency exchanges, the state-run newspaper China Daily online said in February.
Japan, by contrast, declared in April 2017 Bitcoin legal tender as part of efforts to become a major cryptocurrency trading center. Japan’s trade comes to 58% of the global volume.
“China banned it, so we could say ‘hey look we should do it,’” Hsu said.
Singapore allows free trade in cryptocurrency and regulates cryptocurrency exchanges in case of laundering or funding for terrorists.
Taiwan probably lacks “momentum” to pass a cryptocurrency regulation at least in the first half of the year, Hsu says, but he believes guidelines are already in the works. People are already trading it, he notes.
“It’s not so hard to regulate this,” he said. “You look at what Singapore is doing. Younger people want it and if our government fails to understand this, it’s a pity.”