Taiwan's legislative body, the Legislative Yuan, has taken initial steps towards cryptocurrency regulations with a new draft proposal — the Virtual Asset Management Ordinance — for the sector.

Taiwan's move to draft this comes as discussions about regulating this burgeoning sector gain momentum worldwide.

Yung-Chang Chiang, a parliament member involved in proposing the act, told The Block, "After the first reading of the bill, discussions on the regulatory framework for the virtual asset industry have progressed to the next stage."

He expressed optimism about the Financial Supervisory Commission (FSC) presenting its draft version to the legislature. This would allow for a broader societal consensus during the review phase.

As countries worldwide grapple with the fast-paced world of digital assets, events like Benzinga's Future of Digital Assets conference on Nov. 14 are crucial for stakeholders to gain insights and share knowledge.

Last month, Taiwan's FSC encouraged the cryptocurrency sector to establish its self-governing rules through a possible industry association.

Chiang pointed out the limitations of such guidelines, highlighting their lack of legal binding.

"In this case, under the authority of this special law, regulatory authorities can impose administrative penalties on operators who violate these self-regulation rules. Without such a special law, the regulators would lack the ability to impose penalties," Chiang said in a recent parliamentary session.

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The proposed legislation, supported by Chiang and 16 other lawmakers, mandates crypto platforms in Taiwan to secure a permit. Non-compliance would empower regulators to halt their operations.

While there's uncertainty about the timeline for the bill's second reading, Chiang's office suggests it might extend beyond January 2024.

Notably, the tenure of the present legislators in Taiwan concludes the following January.

As of now, Taiwan mandates virtual asset service providers to adhere to anti-money laundering regulations, a directive introduced by the FSC in July 2021.

Apart from this, the cryptocurrency domain remains predominantly unregulated.

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