Friday, October 7, 2022

Taiwan Says Buying Crypto With Credit Cards is Illegal

Taiwan’s chief financial regulator, Financial Supervisory Commission (FSC) is cooking up strategies to halt the use of credit cards for the purchase of virtual digital assets (crypto) in the country.

The FSC sent a note to the banking sector where it insinuated that using these digital assets are similar to online gambling. The financial watchdog has indicated that the virtual assets service providers (VASPs) should not be recognized as merchants in reference to credit card holders in Taiwan. 

Taiwan FSC Emphasis on Speculative Nature of Crypto 

Earlier in July, the Association of Banks in Taiwan received a letter from the Financial Supervisory Commission.

Lodged in the letter was a reminder to the Association of Banks, attesting to the speculative and risky nature of trading and handling Bitcoin (BTC) and other cryptocurrencies. The letter did not fail to mention the complex cash flow encountered in crypto trading as well as the challenges of effectively monitoring transactions.

The high volatility in the crypto market including the incessant fluctuation in price was largely the reason for this warning. Credit card holders are expected to be vigilant and not make any payment for crypto services with their cards. Firms that make use of credit cards in processing crypto transactions have been given a 3-month window to carry out all necessary adjustments for the rule to take a full course. 

The East Asian country introduced rules bothering on anti-money laundering (AML) schemes in 2021. Although this had nothing to do with regulating crypto adoption in Taiwan.

At the time of this writing, the crypto ecosystem in Taiwan still remains unregulated. So far, Taiwan has maintained a tradition of protecting credit card holders from paying for online gambling, stocks, futures, and options, among other things. The FSC believes that credit cards should be used as a consumption payment tool, not an investment wheel or for speculative trading.

Three requirements were given for the adjustments, firstly, credit card acquirers should not sign in VASPs as specialty stores. Secondly, special stores are required not to sign VASP as merchants. Lastly, the credit card acquirers should infuse the first two requirements into internal control and internal audit items, and include them in the focus of the internal audit.

Meanwhile, Taiwan is mulling the idea of developing its central bank digital currency (CBDC), a move that mimics related pursuit by other Central Banks around the world

Victoria Nye
A Blockchain columnist who is enthusiastic about developing a network interface between the real world and the cryptosphere.

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