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Taiwan Regulates Crypto Exchanges, Bans Unregistered Foreign Operators

Key Takeaways

Taiwan’s Financial Supervisory Commission (FSC) releases new guidelines for Virtual Asset Service Providers (VASPs).
Foreign VASPs are prohibited from operating in Taiwan without proper registration.
The guidelines were released on September 26, 2023, and aim to improve investor protection.

Regulatory Framework

Taiwan’s Financial Supervisory Commission (FSC) has taken steps to regulate the cryptocurrency market by releasing guidelines for Virtual Asset Service Providers (VASPs) on September 26, 2023. The guidelines cover a range of issues, including the separation of exchange treasury assets from customer assets, mechanisms for listing and delisting virtual assets, and internal control systems.

Foreign VASPs Face Restrictions

The FSC explicitly stated that foreign VASPs are not allowed to provide services in Taiwan unless they have been registered in accordance with Taiwanese law. This move aims to ensure that all VASPs operating in the country adhere to local regulations and compliance standards.

Self-Regulation Encouraged

The FSC also encourages self-regulation within the cryptocurrency industry. VASP associations are expected to formulate self-regulatory norms based on the contents of the guiding principles. This comes as local exchanges like Maicoin, BitstreetX, Hoya Bit, Bitgin, Rybit, Xrex, and Shangbito have formed the Taiwan Virtual Asset Platform and Transaction Business Association.

Global Exchanges in Taiwan

Major global crypto trading firms like Binance have also been serving customers in Taiwan. Binance reportedly applied for registration in Taiwan under the Money Laundering Control Act. Other exchanges like Kraken and Bybit have been offering services to clients living in Taiwan.

Investor Protection

The FSC has emphasized the need for investor protection, especially in light of recent incidents involving foreign crypto exchanges. The guidelines are part of a broader effort to mitigate risks associated with the highly speculative nature of virtual assets.

Dubai's VARA Appoints Matthew White as CEO

Dubai’s Virtual Asset Regulatory Authority (VARA) has announced a change in its leadership. Matthew White has been appointed as the new Chief Executive Officer (CEO), taking over from Henson Orser. This transition comes at a pivotal time, as Dubai intensifies its regulatory framework for virtual asset service providers (VASPs).

The leadership change is part of VARA’s strategy as it gears up for “full-scale market operations” in 2023. Matthew White, with over 20 years of global advisory experience, including his role as a partner at PricewaterhouseCoopers (PwC), is set to take the helm of VARA. His deep expertise in technology and digital trust positions him well to lead the regulatory body through its next phase of development.

Despite stepping down, Henson Orser will continue his association with VARA in a consulting capacity. Orser, a seasoned financial professional, has been instrumental in establishing a “specialist regulatory regime” for Dubai’s cryptocurrency market, particularly following the challenges faced in the aftermath of the FTX exchange failure.

This leadership transition aligns with the broader efforts of the United Arab Emirates (UAE) to tighten its regulations concerning virtual assets. In a collaborative effort, multiple UAE agencies released comprehensive guidelines for VASPs on November 8, incorporating various penalties for entities operating without appropriate authorization. This move is part of the UAE’s endeavor to be removed from the “grey list” of the Financial Action Task Force, to which it was added in 2022.

As Dubai’s VARA enters a critical phase in its regulatory journey, the appointment of Matthew White as CEO symbolizes a commitment to strengthening oversight and fostering a secure and robust virtual asset market. With the continued support of Henson Orser, VARA is poised to navigate the evolving landscape of cryptocurrency regulation effectively.

Kraken Acquires Registration for VASP in the Netherlands

Kraken has marked a significant milestone in its European growth strategy by securing a Virtual Asset Service Provider (VASP) registration from the Dutch Central Bank (DNB). This achievement not only signifies Kraken’s commitment to regulatory compliance but also underscores its strategic intent to expand its services within the European market, particularly in the Netherlands.

Strategic Importance of the Dutch Market

The Netherlands is recognized for its vibrant startup and technology sectors, coupled with one of the highest rates of cryptocurrency adoption in Europe—approximately 20% of Dutch citizens own crypto. This makes the country a strategically vital market for Kraken’s European expansion plans. The exchange’s recent acquisition of the Netherlands-based crypto exchange Coin Meester B.V. (BCM), pending regulatory approval, further demonstrates Kraken’s intent to deepen its market presence in the country.

Expansion and Regulatory Compliance

Kraken’s VASP registration in the Netherlands enables it to offer a comprehensive suite of services related to virtual assets, including exchange, transfer, custody, and wallet services. This expansion is part of Kraken’s broader strategy to establish a solid footprint across Europe, having already secured VASP licenses in Spain, Italy, and Ireland, and operates in Belgium through a licensed subsidiary.

The VASP registration aligns with the impending EU’s Markets in Crypto-Assets (MiCA) regulatory framework, showcasing Kraken’s proactive approach to compliance and its commitment to providing secure and regulated crypto services. This regulatory milestone contrasts with Kraken’s legal challenges in the United States, where it faced allegations from the SEC for commingling customer funds and operating without proper registration.

Future Outlook

Kraken’s securing of the VASP registration from DNB is not just a testament to its regulatory compliance but also a significant step towards its goal of becoming a leading player in the European crypto market. With this registration, Kraken aims to introduce its offerings to both retail and professional traders in the Netherlands and across Europe, further accelerating its European growth strategy and reinforcing its position amidst the evolving regulatory landscape.

Crypto Exchange Deribit Moves Headquarters to Dubai after Oobtaining VASP License

Deribit, the renowned cryptocurrency options and futures exchange, has been officially granted a virtual asset service provider (VASP) license by Dubai’s Virtual Asset Regulatory Authority (VARA). This strategic move not only enables Deribit to extend its services to the burgeoning Middle East market but also paves the way for the exchange to shift its global headquarters from Panama to Dubai.

The VASP license acquisition is a significant milestone for Deribit, allowing the platform to legally offer a range of cryptocurrency trading services within Dubai. These services include spot trading as well as sophisticated crypto derivatives trading, catering to both institutional and retail clients. With the regulatory green light, Deribit’s presence in Dubai is poised to enhance the city’s status as a global hub for virtual assets and fintech innovation.

Dubai’s progressive stance on cryptocurrency regulations and its commitment to fostering a secure and thriving digital economy have been key factors in attracting Deribit. The VARA, established to regulate the virtual asset sector within the Emirate, is at the forefront of these efforts, providing a comprehensive legal framework that balances market oversight with innovation support.

The relocation of Deribit’s headquarters signifies the exchange’s commitment to compliance and its long-term vision for growth within regulated environments. While Panama has served as a pivotal base for the company’s operations, the move to Dubai reflects a strategic alignment with the region’s rapidly advancing crypto ecosystem and its high potential for financial technology ventures.

This development comes at a time when global regulatory scrutiny of cryptocurrency exchanges has intensified. Authorities worldwide are increasingly demanding that exchanges adhere to strict regulatory standards to prevent money laundering, ensure consumer protection, and maintain financial stability. Deribit’s successful acquisition of the Dubai VASP license demonstrates the exchange’s readiness to operate under such regulated conditions and sets a precedent for other crypto firms seeking legitimacy in similar markets.

The impact of Deribit’s move is expected to extend beyond the borders of Dubai. It is likely to influence the broader Middle East and North Africa (MENA) region, where the appetite for virtual assets is growing. Institutional investors, in particular, may find Deribit’s regulated offerings appealing, as they seek secure and compliant avenues to gain exposure to digital assets.

As Deribit establishes its new headquarters in Dubai, the exchange remains focused on providing a robust trading infrastructure, high liquidity, and advanced trading features that have made it a preferred choice among crypto traders globally. The company’s proactive approach to embracing regulatory frameworks could serve as a model for other platforms looking to navigate the complex world of cryptocurrency regulations.

In conclusion, Deribit’s licensure by VARA and its decision to move its global headquarters to Dubai mark a significant evolution for the exchange and a notable development for the cryptocurrency industry. As the market matures and regulatory landscapes solidify, Deribit’s steps forward could herald a new era of growth and innovation in the virtual assets space.