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Taiwan Democratic Progressive Party legislator Guo Guowen held a "Virtual Asset Supervision" public hearing on the morning of September 7th, discussing whether to establish a dedicated unit, the "Financial Technology Bureau," for regulation, and the issue of whether Taiwan should open leveraged derivative trading. Representatives from Binance and Bitfinex attended the meeting. Wu has compiled the following content based on the meeting records:

Government Representative Opening Statements

Huang Xihuo, Head of the Securities Management Division of the Financial Supervisory Commission (FSC):

1. The Virtual Currency Business Association is about to be established, and the specific implementation of internal guidance principles needs to be developed through the association. As the establishment of specific laws and regulations takes time, it currently still relies on the self-regulation of the industry.

2. Controversial aspects of the current self-regulation draft include the issuance of white papers, transparency, and asset segregation.

3. Some industry players have questioned whether accountants have the ability to conduct audits through certain processes, and there are currently no appropriate insurance providers for coverage.

Shih Wei-jen, Deputy Director of the Department of Industrial Development, Ministry of Economic Affairs:

Blockchain technology is a transnational technology. The main business of the Department of Industrial Development is to promote its technology across various industries and provide guidance to industry players. It can be applied to evidence storage, retrieval, and verification.

You Li-ling, Chief Prosecutor of the Ministry of Justice:

Currently, active cooperation with the Criminal Investigation Bureau is ongoing to combat fraud. Individual currency traders and small-scale operators are particularly serious, and it is suggested that regardless of scale, they should all be regulated under the same standards.

Lin Ming-chun, Chief of the Economic Affairs Division of the Criminal Investigation Bureau:

Currently facing many challenges related to fraud and money laundering, regulation should be established by the administrative department and then enforced by the criminal unit. Common crimes currently include fraud, money laundering, computer extortion, and physical crimes such as kidnapping during transactions. It is hoped that regulation can be legalized, as self-regulation by industry players alone will lead to many problems. It is also hoped that both platforms and over-the-counter (OTC) operators will be uniformly regulated.

Industry Representative Speeches

Chen Ming-hui, COO of Maicoin:

1. Regarding regulation, it is hoped that specialized laws will be enacted, but management should be tiered, with different management for smaller-scale operators. Different products should also be regulated differently.

2. Regarding the issue of fraud prevention, currently, industry players have difficulty in collaborating on prevention efforts and can only exchange intelligence with government agencies privately, unable to directly prevent customers from being defrauded.

3. Regarding asset segregation, it will significantly increase costs, leading to operational difficulties. Support for foreign currency traders to establish a presence is given, but there should be uniform regulatory standards.

He Xuanrong, Global Partnership at Binance:

The asset segregation system should be audited by accountants, following the example of Japan. Employee capabilities, transparency, and market fairness have a significant impact, and there should be enhanced training for employees. Three suggestions are provided:

1. Virtual assets should be viewed as entirely new independent financial assets.

2. Establish a team with diverse backgrounds to manage, providing a more diverse perspective and a different understanding from traditional approaches.

3. There should be good cross-disciplinary cooperation and communication.

Scholar Representative Speeches

Professor Li Kunzhang:

1. What are the standards for guiding principles? Will it be based on public issuance companies, or will new internal control standards be established by the competent authority in the future?

2. The government should take the development of trading platforms seriously to avoid Taiwan being marginalized.

3. Coaching and regulation should be separated, and it is suggested that the FSC be responsible for supervision, with the Ministry of Economic Affairs serving as a coaching agency to avoid conflicts of interest. Currently, the capacity to combat fraud is mainly within the purview of the judiciary and investigative agencies, and administrative agencies should promptly establish regulatory rules.

Teacher Zang Zhengyun:

1. The controversy over virtual assets is not suitable for being divided into many separate discussions. It is suitable for being collectively addressed to avoid conflicts between various departments.

2. In the future, when consumer disputes arise, who should be responsible for resolving the disputes? It is suggested to establish a Financial Technology Bureau and provide sufficient regulatory resources to relevant units.

3. In the future division of labor, which matters can be self-regulated, and which matters should be externally regulated, should be further discussed widely.

Associate Professor Xu Peiling:

1. The current second item of the second clause of the guiding principles is not clear enough and needs further discussion. The exclusion of stablecoins and the reasons for it, and if it is too detailed, different types of coins will have different regulations, making it difficult for industry players to comply with regulations. It is suggested to enact specialized laws to include all types. What is the significance of major events in the tenth clause?

2. Smaller-scale operators will also bear the high cost of regulatory compliance, increasing pressure on industry players.

3. Will the consideration of opening derivative products be taken into account in the future? It is suggested to establish a specialized regulatory authority.

Association Representative Speeches

Tsai Yuling, Chairperson of the Taiwan FinTech Association:

Currently, the industry is facing challenges from traditional finance entering the market. At this stage, Taiwan's policies for industry development are not clear enough, and there is a hope for more proactive industry policies. Industry self-regulation principles should be classified and standardized.

Li Yunheng, Lawyer/Deputy Secretary-General of the Taiwan Virtual Asset Anti-Money Laundering Association:

The broad definition of guiding principles and anti-money laundering places a heavy burden on some industry players with the same set of standards. It is hoped that the establishment of the industry association will promote communication with various departments, and it is hoped that the competent authority will assist industry players in enhancing professional knowledge and capabilities internally.

Lin Hongyu, Chairman of the Bitcoin and Virtual Currency Development Association:

1. After the establishment of the industry association, it is suggested that the competent authority and the industry association work more closely to make the regulations more specific. Regarding the prohibition of advertising by overseas platforms in the current guiding principles, it is suggested that the industry association should be authorized to formulate it, and whether it is possible for compliant domestic operators to jointly market with overseas platforms, ensuring accountability and consumer protection.

2. Insurance (such as commercial insurance, reinsurance), accounting (internal control and compliance), and legal (compliance audits) will be important supporting measures for the guiding principles in the future. They should work together with the insurance industry association, accountants/lawyers association to assist in formulating relevant regulatory measures.

3. The association has already established formal communication channels with the Salvadoran authorities (including the Virtual Asset Bureau, the Central Bank, and the Presidential Palace) and is willing to share these communication channels with everyone.

4. Advocating for the normalization of the industry, calling for an expansion of the scope of anti-money laundering declarations, reducing gray areas, underground, and illegal operators, allowing compliant operators to formally enter the industry. At the same time, it is suggested to establish a "Virtual Asset Bureau" to ensure regulatory effectiveness.

Lawyer Representative Speeches

Cao Weijie, Lawyer/Founder of Shinex International Business Legal Affairs Firm:

1. There should be tiered and classified regulation. For example, requiring individual currency traders to segregate assets places too much burden on industry players. It is suggested that industry players discuss cases jointly with investigative agencies to establish common standards.

2. The cost of a currency flow tracker is high. Is it possible to have a role similar to a central depository to coordinate and reduce costs?

3. Support for the enactment of specialized laws and the establishment of the Financial Technology Bureau.

Xiong Quandi, Partner Lawyer at Rilu Law Firm:

Currently, the characterization of virtual currency varies worldwide. Is it suitable to apply traditional regulations to virtual currency?

It is suggested to establish a specialized authority and enact specialized laws for management.

FSC Response

Huang Xihuo, Head of the Securities Management Division of the FSC:

1. It will take a long time to enact specialized laws, so self-regulation standards are still a priority at this stage. The details of internal control guidelines will be developed by the industry association.

2. Consumer dispute resolution is based on contractual relationships between industry players and can also involve the industry association in providing assistance.

3. The exclusion of stablecoins is because Taiwan currently cannot issue them, as it involves issues with the supply of legal tender. The definition of significant incidental events and the method of announcement will be developed by the industry association.

4. It should be carefully considered whether domestic industry players should assist overseas industry players in advertising, as consumers find it difficult to seek compensation from overseas industry players, and responsibility is difficult to determine.

Huang Chaobang, Deputy Head of the Futures Management Division of the FSC:

Currently, 27 anti-money laundering declarations have been received, of which 23 require supplementary documents, and 4 are still under review. The review and prompt announcement of new industry players' anti-money laundering declarations will continue.

Chairperson's Response

Preliminary conclusions of the public hearing:

1. Guiding principles should consider the industry players' capacity to bear risks and should not unilaterally require risk reduction.

2. Regulations should not only focus on intensity but also consider breadth.

3. It is suggested that the government develop appropriate industry development policies.

4. It is suggested to establish a specialized Financial Technology Bureau for management.

5. The goal is to move towards the establishment of specialized laws.

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