After in-depth discussions with Lin Hongyu, the founding chairman of the Taiwan Bitcoin and Virtual Assets Development Association, Techb News founder Alma continued the dialogue with Lin Shanglun, the association's deputy secretary-general and a lawyer at Hengye Law Firm. Lawyer Lin Shanglun further revealed the operational details and future direction of the virtual asset industry in Taiwan from multiple aspects, including the composition of association members, market potential, regulatory transformation, and organizational structure achievements, presenting more key dimensions of industry development.
Association Members: Diverse Coverage Across All Tracks, International Connections Show Advantages
Regarding the membership scale and composition of the Taiwan Bitcoin and Virtual Assets Development Association, lawyer Lin Shanglun stated that the association aims to maintain neutrality and diversity, widely absorbing participants from different tracks within the virtual asset industry. Members include exchanges, custodians, blockchain security companies, cloud service providers, accounting firms, venture capital (VC) institutions, and law firms.
Currently, the number of association members is approximately between 200 and 300. The membership scale shows a clear market cycle characteristic, with significant growth during bull markets, as many new practitioners and institutions actively join the association to seek industry communication and resource connections.
While focusing on the development of local members, the association is also actively expanding its international cooperation landscape. Lawyer Lin Shanglun introduced that the association frequently participates in important international industry events, such as TOKEN2049 in Dubai and Bitcoin Asia in Hong Kong, establishing close ties with overseas practitioners and media. This international connection currently shows unique advantages—when practitioners in Hong Kong and mainland China face "landing" challenges due to regulatory restrictions, Taiwan, with its relatively open attitude and gradually improving compliance environment, has become a potential landing spot for overseas institutions, and the association's international communication work has built an important bridge for these overseas institutions to understand the Taiwan market.
Market Potential: Regulatory Shift from Defensive to Offensive, Future is Promising
Regarding the future potential of the virtual asset market in Taiwan, lawyer Lin Shanglun analyzed the shift in regulatory policies and expressed an optimistic attitude. He recalled that in the past, Taiwan mainly managed the virtual asset industry through the Anti-Money Laundering Act, taking an overall crime prevention stance, only requiring practitioners to complete anti-money laundering declarations to operate in compliance. This management approach had limited effectiveness between 2021 and 2022, especially after the serious virtual asset fraud issues erupted in 2022, leading to a sharp decrease in the number of registered exchanges from 27 to 8. On one hand, some practitioners were delisted due to involvement in illegal capital operations, violations of banking laws, or assisting in gambling and fraud-related money laundering; on the other hand, local regulatory agencies also strengthened their review efforts, eliminating non-compliant entities.
In 2024, the Anti-Money Laundering Act will undergo significant amendments, with not only increased penalties but also a preemptive identification of illegal activities. Previously, the penalties for failing to complete anti-money laundering registration were only administrative fines ranging from NT$100,000 to NT$500,000 (with corporate fines being heavier); the new regulations clearly state that engaging in virtual asset-related businesses without registration will be identified as money laundering crimes under criminal law, directly upgrading from "result offender" to "behavior offender," with a maximum sentence of two years in prison and individual fines raised to NT$5 million, while corporate fines can reach up to 10 times the individual fines. This strict regulatory measure further cleansed the industry of chaos, accelerating the exit of non-compliant practitioners from the market.
However, the tightening of regulations is not entirely a "cold winter." Lawyer Lin Shanglun emphasized that with the advancement of specialized virtual asset laws, Taiwan's attitude towards the virtual asset industry has shifted from defensive to actively aligning with international standards. For example, following the passage of the GENIUS Act in the United States and the relaxation of derivative trading in Hong Kong, Taiwan also plans to positively issue industry licenses through specialized laws. This shift from "prevention" to "direct management" fully reflects the local government's recognition of the value of the virtual asset industry. He believes that Taiwan is expected to become an important hub for international funds and practitioners in the future, especially as local enterprises gradually grow on a compliant basis, enabling positive interactions with overseas competitors to jointly promote industry development.
Association Structure and Achievements: Multi-Track Efforts to Drive Industry Breakthroughs
Regarding the organizational structure and main achievements of the association, lawyer Lin Shanglun introduced that the association gathers talents from multiple professional fields, including exchanges, custodians, blockchain developers, and lawyers and accountants with international backgrounds. Its business covers three core areas: industry development, academic cooperation, and community promotion, with each sector working collaboratively to provide comprehensive support for the development of the virtual asset industry in Taiwan.
In the industry development sector, the association maintains close cooperation with relevant government departments in Taiwan and actively participates in industry policy formulation. For example, during the discussions on the draft of the specialized virtual asset law, the association, as an industry representative, repeatedly provided feedback on the actual needs and suggestions of the industry to the local Financial Supervisory Commission and Legislative Yuan, offering important references for the rationality and operability of the policies. In terms of international cooperation, the association not only actively participates in industry conferences in Dubai, Japan, and Hong Kong but also assists heavyweight industry figures like Adam Back, the father of cryptography, in visiting Taiwan for exchanges, building an international communication platform for the virtual asset industry in Taiwan. This collaboration with Techb News is also one of the important measures for the association to promote internationalization.
In the academic cooperation sector, the association collaborates with academic figures such as the president of the Chinese Taipei University of Finance and the professor at Ming Chuan University to jointly draft industry self-regulatory standards and promote academic research in the virtual asset field, providing theoretical support for industry policy formulation. In community promotion, the association actively participates in Taiwan's largest ABS events, TOKEN2049, and other industry gatherings, providing practical benefits to members (such as distributing five public relations tickets during the ABS event in Hong Kong) and continuously updating cutting-edge industry knowledge to help members keep up with industry trends.
It is worth mentioning that the association has achieved a key breakthrough in promoting the opening of Bitcoin ETF re-delegated trading in Taiwan. In early 2024, the local Financial Supervisory Commission prohibited the public from investing in overseas Bitcoin ETFs through brokers via "re-delegated" methods due to concerns about fraud risks and market volatility. Upon learning of this, the association immediately organized efforts to communicate with Taiwanese legislators and the Financial Supervisory Commission, detailing the regulatory background of the SEC's approval of Bitcoin ETFs in the United States and the compliance frameworks of institutions like BlackRock, ultimately successfully facilitating policy relaxation. Given that the Taiwanese society still highly associates Bitcoin with fraud at that time, this achievement is of milestone significance for the industry's development.
Addressing Fraud Challenges: Establishing Self-Regulatory Standards and Supporting Anti-Fraud Campaigns
Fraud issues have always been a significant obstacle to the development of the virtual asset industry in Taiwan, and lawyer Lin Shanglun provided an in-depth interpretation of this. He stated that the serious fraud problems in Taiwan's virtual asset sector are closely related to complex geopolitical factors and difficulties in cross-border accountability. Fraud groups can exploit cross-border advantages to evade regulation, making them relatively active within Taiwan, with common tactics including illegal fundraising under the guise of Bitcoin and other virtual assets. This has led the local Financial Supervisory Commission to maintain a cautious attitude towards the virtual asset industry for a long time, especially worrying that virtual currency-related products (such as Bitcoin ETFs) could be misused by fraud groups as "legitimate" gimmicks to mislead the public.
To address this issue, the association has taken multiple countermeasures. On one hand, the association has taken the lead in establishing industry self-regulatory standards, collaborating with Taiwan's two leading exchanges, Max and BitoPro, to introduce internationally accepted standards for fund security and information security, creating detailed model clauses for other exchanges to reference and emulate. These standards have ultimately been adopted by the Taiwan Virtual Currency Business Association, ensuring that the currently existing eight compliant exchanges meet international standards, thereby reducing fraud risks from the source. On the other hand, the association actively cooperates with the Taiwanese government to carry out anti-fraud campaigns, supporting virtual asset knowledge education in schools and public awareness enhancement activities to help the public identify fraud traps and reduce the occurrence of fraud cases.
Current Status of Exchanges: Local Focus, Internationalization Awaiting Policy Breakthroughs
Regarding the user composition and degree of internationalization of compliant exchanges in Taiwan, lawyer Lin Shanglun admitted that the current compliant exchanges primarily serve local users, with a low proportion of overseas users. This situation is closely related to Taiwan's regulatory environment: compliant spot exchanges in Taiwan have established fiat currency deposit channels with local banks, facilitating operations for local users. However, since Taiwan prohibits virtual asset derivative trading, compliant exchanges can only provide spot services. After depositing funds through compliant exchanges, users often transfer their funds to overseas platforms like Binance, GATE, and Coinbase to participate in futures, contracts, or high-yield staking derivative trading.
This "local deposit, overseas trading" model makes Taiwan more like a virtual asset fund transfer hub and reflects the current limitations of regulation—compliant exchanges in Taiwan, due to restricted business scope, find it difficult to compete with overseas platforms that offer diversified services; at the same time, strict review standards also make it challenging for overseas practitioners to establish operations in Taiwan. Lawyer Lin Shanglun believes that if future specialized virtual asset laws can relax derivative trading regulations and treat domestic and foreign practitioners fairly, the international competitiveness of exchanges in Taiwan will significantly improve, attracting more overseas users.
Specialized Law Reference: Primarily Based on the U.S., Considering International Standards
In terms of the reference direction for the drafting of the specialized virtual asset law, lawyer Lin Shanglun clearly stated that the draft is primarily centered on U.S. experience while also considering the anti-money laundering standards of the FATF (Financial Action Task Force) and appropriately absorbing some regulatory ideas from Hong Kong. Among them, the U.S. GENIUS Act and its mature framework in asset custody separation and layered management of exchanges and custodians have a significant impact on the specialized law draft in Taiwan. The draft continues the core requirements of anti-money laundering while emphasizing layered regulation of different market entities such as exchanges and custodians, ensuring that regulatory measures meet international standards while being adaptable to the local industry situation in Taiwan.
Cross-Strait Cooperation: Short-Term Focus on Content Exchange, Long-Term Awaiting Capital Connectivity
Regarding the potential cooperation opportunities between Taiwan and Hong Kong in the virtual asset field, lawyer Lin Shanglun believes that due to the financial regulatory policies across the strait, cross-border capital flow and company establishment cooperation face significant difficulties in the short term, especially with the strict review by Taiwan's Investment Review Committee, which presents many obstacles to capital connectivity. However, in terms of content and community, there is ample room for cooperation between the two regions. For example, the Taiwan association can collaborate with media and industry associations in Hong Kong to hold joint events, sharing industry knowledge and experiences; both sides can also engage in academic exchanges and developer community cooperation to jointly promote the application of blockchain technology in the region. This series of interviews by Techb News with the Taiwan association is a good starting point for industry exchanges between the two regions.
KOL Rebate Risks: Clear Regulations, Existing Cases as Warnings
Regarding the legal risks associated with KOLs (Key Opinion Leaders) in Taiwan collaborating with exchanges to earn commissions, lawyer Lin Shanglun provided a detailed interpretation. He pointed out that according to the current regulations in Taiwan, there are clear legal risks for KOLs collaborating with exchanges for commissions, especially when the partner is a non-compliant overseas exchange. Under the Anti-Money Laundering Act, engaging in virtual asset-related businesses without registration has been identified as money laundering crimes. If a KOL's commission activities are deemed to "assist in operating" a non-compliant exchange, it will directly violate this law, potentially facing a maximum of two years in prison, individual fines up to NT$5 million, and corporate fines up to ten times that amount.
Currently, there have been cases in Taiwan where criminal investigations have been initiated—some KOLs have been investigated by local police after collaborating with exchanges for commissions, particularly when the partnered platform collapsed or was reported by the public. Some cases are still under investigation. Lawyer Lin Shanglun emphasized that although there have not yet been clear sentencing cases, the local government typically triggers investigations based on "whether there are victims," reminding KOLs and related practitioners to pay close attention to compliance issues. Previously, an overseas exchange had placed advertisements on public buses in Taiwan, which drew regulatory attention due to non-compliant promotion, serving as a warning for the industry. The association has also received multiple inquiries about similar cases, providing detailed risk analyses and compliance advice to inquirers. However, due to the relatively open nature of the legal elements, specific determinations still need to be judged based on individual case circumstances.
Industry Builders: Bull Market Trends Shift, RWA Becomes a New Direction
Regarding the current status and dynamics of "builders" in Taiwan's virtual asset industry, lawyer Lin Shanglun reviewed the impact of market cycles. In the last bull market (2021-2022), blockchain builders in Taiwan were highly active, with a surge of GameFi and NFT projects. Notable figures such as Jay Chou, Jiang Youbo, and Huang Licheng also participated in NFT issuance, driving a wave of innovation in the industry. However, in the current bull market, due to stricter regulations, the industry's focus has shifted towards financial compliance areas, such as compliant operations of exchanges, asset custody services, and corporate treasury strategies, leading to a relative slowdown in technical development activity.
Nevertheless, new development directions are gradually emerging. Lawyer Lin Shanglun stated that the RWA (Real World Assets) sector is beginning to attract the attention of practitioners in Taiwan. Some teams hope to combine blockchain technology with real assets like real estate to eliminate the negative impressions previously associated with the NFT sector and explore more pragmatic application scenarios. Although the U.S. has made rapid progress in the RWA field, Taiwan is still limited by regulations that do not fully support non-financial virtual asset applications, resulting in relatively slow development. However, Taiwan still has an active developer community, especially within the Ethereum and Solana ecosystems, where some teams are continuously exploring new projects. Lawyer Lin Shanglun looks forward to the implementation of specialized virtual asset laws, which could provide a more relaxed policy space for technological innovation and reinvigorate the builders in Taiwan's virtual asset industry.
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