Taiwan regulators mull piloting crypto custody services with local banks: report

Taiwan’s financial watchdog is reportedly planning to launch a pilot program for crypto custody services, and three banks have already expressed interest.

Taiwan’s Financial Supervisory Commission will launch a pilot program for crypto custody services aimed at encouraging institutional adoption of digital assets in the region, according to information obtained by Taiwan’s official state news agency, the Central News Agency.

The FSC is said to be planning to encourage financial institutions to apply for themed business trials; Three banks have already expressed interest in participating and the first applications are expected in the first quarter of 2025.

Hu Ze-hua, director of FSC’s comprehensive planning department, commented to CNA that although brokerage firms have also shown interest, concerns about capital adequacy and security may lead them to partner with banks from the same group to apply for the trial. .

As part of the application process, financial institutions will need to specify the types of cryptos they plan to hold, as well as their target customers. Hu emphasized that foreign banks often begin servicing crypto exchanges before expanding their services to professional and general investors.

The FSC is also reportedly aiming to implement stricter anti-money laundering rules to prevent the retention of assets linked to illegal activities, although specific details have not yet been disclosed. In early October, crypto.news reported that the FSC was drafting the “VASP Registration Regulations”, which will come into force on January 1, 2025. The measures follow changes to the AML Law in July as part of Taiwan’s broader initiative to regulate the growing crypto sector.

Unlike previous AML regulations, the new rules will specifically target crypto-related businesses and require entities such as crypto exchanges, trading platforms and custodians to register and comply with enhanced anti-money laundering protocols. Once the law comes into force, crypto providers will be required to submit annual risk assessment reports and establish internal control and audit systems.