Chiara Bianchi
In a bid to explore the potential for financial innovation, Taiwan Financial Supervisory Commission (FSC) plans to advance thematic business pilot programs. These programs will encourage financial institutions to apply for crypto custody services. So far, three banks have shown interest, and the first application for a crypto custody service pilot is expected in the first quarter of next year.
The Taiwan Financial Supervisory Commission is set to regulate the virtual asset industry and plans to unveil a draft law by the end of this year, providing the sector with clear guidelines and development opportunities. In parallel, to promote financial innovation, the commission will facilitate thematic business pilots that allow financial institutions to experiment with crypto custody services.
During a routine press conference, Hu Zehua, Director of the FSC’s Comprehensive Planning Division, stated that before formally accepting applications for virtual asset custody pilot programs, the commission will publicly disclose consultation materials for 15 days to gather feedback from the public. Following this consultation period, the FSC will revise the materials based on the feedback received and announce the date for accepting thematic business pilot applications. The commission estimates that the first application will emerge in the first quarter of next year.
According to the FSC, three private banks have expressed interest in offering virtual asset custody services, targeting clients such as virtual asset exchanges and professional institutional investors.
Hu also noted that while some securities firms had initially shown interest, their smaller capital base raised safety concerns, leading to the likelihood that custody applications would be made by their affiliated banks instead.
Taiwan FSC to Emphasize Safety
Hu emphasized that foreign entities engaged in cryptocurrency custody prioritize security due to the potential involvement of cryptocurrencies valued at millions or even billions of dollars.
The FSC will place special emphasis on the security of custody services. Besides ensuring safety, it will also focus on the implementation of anti-money laundering measures, requiring financial institutions to prevent the custody of virtual assets sourced from illegal funds to mitigate the risk of total asset seizure.
According to the FSC’s published materials, financial institutions applying for virtual asset custody pilot programs must specify the types of virtual assets they will handle, such as Bitcoin, Ethereum, and Dogecoin. They must also clarify their target clientele for these custody services, which may include virtual asset platforms, professional investors, or retail investors.
Hu mentioned that banks abroad typically start by offering custody services to virtual asset exchanges and, after gaining experience and confidence in security, gradually expand their services to professional investors. It is relatively rare for them to include retail investors in the initial phase of offering these services.
