Taiwan to ban anonymous transactions but still embraces the wider crypto market
The small jurisdiction of Taiwan recently enacted laws to prohibit cryptocurrency transactions that constitute anonymous activity in an attempt to reduce threats associated with money laundering and terrorist financing.
The framework dictates that those facilitating cryptocurrency activities within the nation must identify their users. Furthermore, the ruling also gives financial institutions the ability to reject payments linked to anonymous cryptocurrency transactions, should they be unable to verify the original source of funds.
For those that fail to implement sufficient KYC and AML policies, the Taiwan government has introduced a fine system. Amounts for non-financial institutions have been capped to 50,000 Yuan (approx. $7,100), with financial institutions liable for a fine of up to 500,000 Yuan (approx. $71,000).
The move to ban anonymity within the cryptocurrency space follows that of neighbouring Japan and South Korea. For example, earlier this year, the Japanese Financial Security Agency announced that the country would no longer support purely anonymous cryptocurrencies. As a result, Japanese cryptocurrency exchanges de-listed a range of privacy coins, such as Monero, ZCash and Dash.
Regarding the latter, South Korea have also stepped up their legislative efforts to restrict anonymous use of cryptocurrencies. Not only do South Korean residents have the go through a stringent KYC program when using third party exchanges, but they must also link wallet balances to a domestic bank account. Furthermore, non-South Korean residents are restricted from opening cryptocurrency exchange accounts.
Nevertheless, much like South Korea and Japan, Taiwan have no intention of hindering cryptocurrency usage within their domestic markets. On the contrary, the jurisdiction are looking to become an international hub for blockchain-based ventures, much like its booming electronics and hardware manufacturing stronghold. This is in stark contrast to neighbouring China, who have clamped down on practically every angle linked to the industry.
Moreover, not only has the nation held multiple Blockchain Summits this year, but the Taipei Fubon Commercial Bank became the first financial institution in Taiwan to utilize blockchain technology within its payments system.
Ultimately, the move to tighten up regulation could potentially provide a long-term framework for Taiwan to reach its goals of playing a major global role in the future of cryptocurrencies and blockchain technology.