Taiwan’s Financial Supervisory Commission is preparing to launch a pilot program for institutional cryptocurrency custody. The regulator aims to begin collecting applications in early 2025, and three private banks have already expressed interest in participating.

The latest move symbolizes efforts to promote institutional adoption of cryptocurrency in the region.

Institutional Cryptocurrency Custody in Taiwan

According to local media, banks participating in the pilot must specify the types of virtual assets they will be storing (such as Bitcoin, Ethereum, or Dogecoin), as well as whether their services are intended for platforms, professional investors (such as institutions), high-net-worth enterprises, or the general public.

At a press conference earlier this week, Hu Zehua, director of comprehensive planning at the FSC, emphasized that while some security companies have expressed interest, banks are better suited for the role due to their larger capital reserves and security concerns.

Zehua also mentioned that the FSC plans to hold a 15-day public consultation before accepting applications for the trial operation of virtual asset custody services.

During this period, the regulator will explain the proposed principles and will be open to opinions, which will be used to make the necessary changes before the official launch. The purpose of this process is to allow the three private banks that have expressed interest in the trial to submit their applications after the review period has ended.

Taiwan puts special emphasis on cryptocurrencies

The latest development comes amid the Taiwanese government’s increased attention to cryptocurrency. The FSC recently introduced a policy allowing professional investors to invest in foreign cryptocurrency exchange-traded funds (ETFs) through local brokers, restricting access to professional investors only.

In addition, last week, the FSC updated its anti-money laundering (AML) rules to strengthen supervision of local virtual asset service providers (VASPs). Non-compliant entities will be subject to severe penalties. The new AML measures, which take effect on January 1, 2025, require all crypto companies to register with the government by September 2025.

Those who fail to comply could face up to two years in prison or a fine of up to NT$5 million (which is about $155,900). Despite the already existing AML rules, even fully compliant companies must re-register with the agency to avoid fines as of July 2021.

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