According to a recent report, Taiwan is getting ready to prohibit all credit card purchases of cryptocurrency from banks. The Financial Supervisory Commission (FSC), the nation’s financial watchdog, has directed credit card issuers to cease all transactions with digital asset exchanges.
Taiwan’s Regulatory Body Issues Letter to the Local Bank Association
Early in June, the FSC delivered a letter to the banks’ association warning them about the dangers of dealing with digital assets. In addition, the regulator also requests that credit card companies avoid adding cryptocurrency platforms as vendors.
Furthermore, the FSC also stated that people could not use credit cards in Taiwan to purchase stocks, futures, or other items. According to Taiwan’s financial regulator, credit card businesses now have three months to adhere to the new guidelines.
Taiwan has consistently implemented new laws to regulate the activities of crypto exchanges. In July 2021, the country introduced a new regulation to the crypto industry to fight against money laundering.
The breakthrough came after policymakers worldwide accelerated their crypto laws after the cryptocurrency market took a significant setback.
Some of the guidelines implemented by the FSC mandated crypto exchanges to report transactions in cash worth over $17,900. In addition, exchanges are also required to complete know-your-customer (KYC) requirements to capture the accurate identity of their customers.
Following China’s blanket ban on cryptocurrency last year, Taiwan became the region’s next destination for crypto activity.
It has grown to become one of the fastest-growing crypto hubs. However, the recent market crash burst the bubble, and authorities began scrutinizing the industry again.
Taiwan Working on CBDC
At the beginning of the year, the central bank of Taiwan undertook a trial of the central bank digital currency (CBDC). The test is reported to be a technical simulation of the digital currency before the financial regulator can announce the final release.
In September 2020, Taiwan started researching and testing a retail CBDC prototype. Chinlone Yang, Taiwan’s central bank governor, noted that the country is looking to develop a retail payment system.
Yang added that the central bank has partnered with five Taiwanese banks to create an efficient retail payment system.
However, the central bank is not currently considering launching the CBDC officially until it has adequately informed the public about its use. In addition, the financial watchdog intends to iron out the right regulations with a legal framework to back them up.
Commenting on how the CBDC should function, Yang noted that the central bank would provide banks with the CBDC. In return, the commercial banks will distribute the tokens to the public for retail use.
Taiwan is one of many countries working on developing CBDC backed by their national fiat currencies. The move is to limit the growing influence of privately issued digital currencies on the macroeconomy. Governments view cryptocurrency as a threat to the traditional financial system.
Meanwhile, other countries are yet to urgently take up the CBDC project, partly because of the many technicalities involved in its implementation.