So, Taiwan is stepping it up when it comes to regulating digital assets like crypto. You know, the whole FTX fiasco hit hard, especially since a lot of Taiwanese folks were into it, so it’s no surprise lawmakers are rushing to get this Virtual Asset Management Ordinance Draft bill through.
Right now, it’s just had its first reading in the Legislative Yuan, but we can expect a second and final reading before it officially becomes law.
The bill suggests some interesting stuff like letting professional investors trade freely, not taking a strong stance on stablecoins or derivatives, and keeping locally licensed exchanges to just separate business funds from customer assets.
What do you all think about this move from the lawmakers? Are you supportive of this bill or do you think it needs some tweaks before it’s good to go?
I’m really curious to see what you all think. Cheers!
It seems that the proposed digital asset bill is to protect investors more than it is a cryptocurrency project, or are you talking about the amendments that were made to it?
Not restricting professional investors and locally licensed exchanges only requiring separation of business funds and client assets are all indications that they just want to stop random investing in cryptocurrencies and reduce the losses of inexperienced traders who may rush into random investments as some do with FTX or altcoins.What is the definition of Bitcoin in the bill?
From this reading I see that the Taiwanese government's stance is moving towards leniency towards cryptocurrencies, and it is clear that they want to create an open business environment by not restricting professional investors from participating in trading.
The other measure, which is the most important in my opinion, I mean separating business funds and customer
assets comes to protect investors in general, especially inexperienced traders, from problems related to stock exchanges such as hacking, bankruptcy, etc.
It is good to see this type of regulation regulating exchanges, protecting users and creating a positive atmosphere for crypto companies at the same time.
Taiwan is at the infant stage of cryptocurrency regulation and it is good that the country is setting up rules to protect customers from some dubious players in the industry. Giving exchanges or other crypto firms free hands to operate can have some undesirable consequences. However, the proposed laws seem flexible and will attract more investors to Taiwan. I am a supporter of Proof of Reserves for centralized platforms but the draft is silent on that which I find challenging. However, the draft law gives room for periodic audits and control of their accounts by the Financial Supervisory Commission (FSC).
I don't see how separating business funds and customers assets will happen or how it will be implemented because this means that there are third-party services or applications that take customers money and leave the fees to the platform, or will the platform pay an amount as a guarantee because the platforms failure to use customers funds makes their resources scarce, as some of them work like a bank, investing customers money in low-risk investments, It leaves a good percentage for daily withdrawal, so most or all platforms collapse if clients suddenly decide to withdraw their funds.
Almost everyone in Asia is still in the infancy stage of adapting crypto, some of them are still in the gray area, some enacted some form or regulations but it is a work in progress. So this could be the case for Taiwan as well as they are trying not to be left out by some of it's neighbouring countries as far as crypto regulation and adoption goes.
So it's good that at least they are going on the right direction as opposing it. And then are obviously different from Mainland China and they wanted to give freedom to it's people and not oppress them. Not sure though about the Proof of Reserves, I mean not every exchange are Safu, but if it is going to be local exchange yeah, I do agree that it should be enforce. But for exchanges like Binance and others, it's going to be hard to force them but we all know that as per CZ they are SAFU.
SAFU or other funds give false hopes that your money is safe, unless these funds are managed by regulatory bodies or at least third parties to ensure that there is a percentage of clients funds that are guaranteed, amounting to about 50% of it for amounts above 50 thousand dollars and 100% for amounts below that. There is no benefit from it.
What is the benefit of putting $10 million into SAFU when the total customer deposits are in the billions?
Therefore, central banks are almost the only ones able to guarantee this with commercial banks, and it is better not to leave your coin in CEXs account after completing trading.
This is the thing, they will be banned from!
Japan has already been doing this for years and this is a reason why FTX Japan users still have their money!
There is a bit of nuance here
- you deposit your money in a bank but you expect interest, how would that work if the bank is not allowed to touch your money
- you deposit coins on an exchange knowing that you can withdraw them at any time but you don't demand interest and they get fees from you
- you deposit coins for 100% APY then you know those coins are going to be lend
What those laws require is that unless the user specifically allows you to play with his money you must keep every deposit safe and untouched.
Rather than a bank, think of it like your stock broker, imagine you call him to liquidate some AAPL shares and he tells you everything is in SBNY (signature bank).
Yeah right!