In a move aimed at addressing offshore market concerns and bolstering regulation within the crypto asset industry, Taiwan's parliament has approved the first reading of a proposed cryptocurrency bill.

Taiwan is taking its initial steps towards crypto regulation with the introduction of a Virtual Asset Management Ordinance Draft bill, which successfully cleared its first hurdle within Taiwan's Legislative Yuan. This collaborative effort, co-authored by 17 lawmakers, acknowledges the distinctive nature of crypto assets compared to traditional financial products, highlighting the need for specialized regulations.

The primary objective of this bill is to establish a regulatory framework that provides oversight for the crypto industry. While Taiwan's Financial Supervisory Commission (FSC) had previously issued guidelines for the crypto sector, the proposed bill seeks to reinforce these recommendations with enforceable legal measures, filling the regulatory gaps that existed under the FSC's guidelines.

Presently, Taiwanese virtual asset service providers are required to adhere to anti-money laundering laws. However, the crypto industry largely operates without comprehensive regulation. The proposed bill aims to change this landscape by setting operational standards for asset operators, bolstering customer protection, and mandating that all cryptocurrency platforms operating within Taiwan secure the necessary permits.

The initial version of the proposed bill calls for exchanges to grant regulators, including the FSC, regular access to inspect their systems. Notably, it does not take a firm stance on derivatives or stablecoins, limit the trading of virtual assets to professional investors, or explicitly require the use of third-party custodians.

While a specific timeline for the bill's second reading has not been outlined, the FSC is expected to contribute its input to the draft before the next phase.

Yung-Chang Chiang, a member of the Legislative Yuan and one of the bill's co-authors, expressed the hope that the Financial Supervisory Commission would present its own draft bill to the legislature, facilitating the consensus-building process across various sectors of society.