TAIPEI (Taiwan News) — A month after the Financial Supervisory Commission of Taiwan (FSC) was tapped to become the primary regulator of cryptocurrencies in Taiwan, a law amendment was passed in the Legislature to justify its role.

A new bureau responsible for supervising virtual assets will be established according to amendments in the Organic Act Governing the Establishment of the Financial Supervisory Commission, which was greenlit on April 21. This is in addition to the existing four bureaus supervising the country's insurance, securities and futures, banking sectors and auditing.

The FSC said its intended crypto regulatory framework would include major new rules and policies. This includes the separation of customer assets from company funds and investor protection practices.

At the time of the announcement there was uncertainty whether other virtual assets such as nonfungible tokens (NFTs), would fall under the FSC’s supervision or under the supervision of the Ministry of Digital Affairs.

On April 26 it was announced the FSC’s four existing bureaus of Banking, Securities and Futures, Insurance and Inspection would be joined by a new Virtual Asset Bureau. The addition of the fifth bureau, the first new FSC bureau since 2004, is regarded as a major undertaking within Taiwan’s financial market.

The new bureau is considered necessary to ensure the protection of virtual asset investors. Also, to ensure the prevention and control of money laundering by virtual asset industry operators, in addition to ensuring market stability.

Amendments to the FSC’s constituent law and regulations will be required and it appears the FSC will undergo a considerable amount of internal reorganization. Money laundering prevention will still be dominated by the Banking Bureau and consumer protection may end up under the supervision of the Legal Affairs Division.

The addition of the Virtual Asset Bureau under the FSC will allow it to conduct comprehensive research and discussions concerning the development of the virtual asset market, investor protection and help maintain order in Taiwan’s financial market.

The new bureau recognizes the rapid development of virtual assets. In addition to the familiar Bitcoin, various types of virtual currency, stable currency, decentralized finance are all sectors of the virtual asset market.

Additionally, the world of virtual assets now encompasses developments such as issues relating to commodities, trading platforms and their operators, investment consultants, finance, lending, and even custodial businesses.

Clearly, the virtual asset market is not a traditional financial market. As such, the FSC must adapt and cannot continue to apply existing supervisory concepts to this modern and constantly evolving market.

The FSC will be able to look at Singapore and Hong Kong in terms of local markets that have adapted to virtual assets. The rapid expansion of U.S. regulatory supervision of the virtual asset market is also a valuable resource.

As always, Taiwan must ensure the path it takes is best for its market and the investors.

The market will be interested to observe how the new bureau develops, the new regulations and policies and procedures that must be developed and even the talent that the FSC must attract to make the Virtual Asset Bureau successful. Interesting days ahead for the FSC and Taiwan’s financial market.