Taiwan to Create New Business Category for Crypto Businesses

By Chetna Phour

Recently, Taiwan’s legislator Jason Hsu published a list of policy recommendation about the crypto industry. The policy recommendation aimed at adding cryptocurrency startups in a new business category. The recommendation also suggests that there should be a new legal framework for security tokens.

According to the recommendation, the Ministry of Economic Affairs (MOEA) should create a new business category and rules for cryptocurrencies and token sale. The country is continually pushing the emerging blockchain technology and cryptocurrencies towards modernization. Earlier in 2017, Jason Hsu said that Taiwan’s position on Initial Coin Offerings (ICOs) could be described as “three no-policies” which means Taiwan government does not encourage, not prohibit, and not take responsibility for ICOs. Crypto industry viewed this approach as an opportunity, and Taiwan became one of the most favourite places for crypto startups. To allow the Taiwan Government to maintain such position, an increasing number of ventures, researchers, scholars, and other ICO proponents advocate for the self-regulatory environment for the ICOs as the mechanism to protect investor’s rights.

Jason Hsu proposed that the new regulatory framework would go further and the Ministry of Economic Affairs need to develop new consumer protection and taxation guidelines. Hsu also suggested a specific proposal for security token offerings (STOs) based on the French Commercial Growth and Transformation Act and the U.S. Howey Test. If the proposal signed into law, it would clarify which token sales fall under the Security and Exchange Act of Taiwan. According to Hsu, STOs could fall under the equity crowdfunding rules and related laws.

Jason Hsu also requested the Taiwanese legislature’s Finance Committee to issue guidelines for ICOs. He also added that the guideline must be focused on consumer protection. Recently, financial regulators of Taiwan also announced that it is going to set up ICO regulations within the next eight months. The chairman of Financial Supervisory Commission, Wellington Koo told the committee that

“National standards for how ICOs should be conducted would be completed by June of next year. These standards would outline how tokens can be classified as securities.”

Hus’s proposal came just days after the announcement by financial regulators.