Taiwan’s Financial Supervisory Commission (FSC) has issued a directive,
instructing banks to deny virtual asset providers (VASPs) the status of
merchants for credit card transactions. This move signals Taiwan’s cautious
approach to cryptocurrencies, creating a significant ripple in the global
financial landscape. As a result, credit card usage for cryptocurrency
purchases is effectively blocked in Taiwan, prompting discussions on the
broader implications for the payments industry.
FSC’s Concerns and Equations with High-Risk Transactions
The FSC’s directive, circulated to the Banking Association, highlights
concerns over the speculative and high-risk nature of virtual assets. The
regulator emphasizes that credit cards should primarily serve as consumer
payment tools, not as vehicles for investment, wealth management, or high-risk
speculative transactions. Drawing parallels with prohibited activities like
online gambling and stock trading, the FSC underscores its perception of the
potential risks associated with digital assets. This regulatory stance prompts
a critical examination of how it may impact consumer choice in the payments
sector.
Compliance Challenges for Taiwanese Banks and Global Debate
on Digital Assets
Taiwanese banks are given a three-month compliance window, during which they
must align with the new regulations. Post this period, internal audits and
compliance reports submission to the FSC become mandatory. This directive adds
another layer to the FSC’s historical skepticism towards cryptocurrencies, as
it follows prior warnings about the risks linked to virtual assets. The global
debate on the regulatory landscape for digital assets intensifies, with
implications for how financial institutions, particularly in the payments
sector, navigate the complexities of this evolving space.
Taiwan’s Broader Regulatory Landscape and Central Bank
Digital Currency (CBDC) Program
This directive is part of Taiwan’s broader efforts to tighten control over
cryptocurrency transactions. The introduction of enhanced anti-money laundering
regulations for crypto exchanges in July 2021 aligns with global standards set
by the Financial Action Task Force. Additionally, the ongoing Central Bank
Digital Currency (CBDC) pilot program, operating without interest, showcases
Taiwan’s commitment to exploring digital financial instruments. The FSC’s
directive, coupled with the CBDC initiative, paints a comprehensive picture of
Taiwan’s evolving stance on digital assets,…
