Taiwan’s FSC to Launch Virtual Asset Custody Trials with Major Banks

• Taiwan’s FSC will initiate trials for virtual asset custody in the first quarter of 2025.
• Three banks are set to participate, focusing on cryptocurrencies like Bitcoin, Ethereum, and Dogecoin.
• The trial will prioritize security and compliance to regulate the growing digital asset industry.

Taiwan’s Financial Supervisory Commission (FSC) will launch its first virtual asset custody trials in early 2025, with three major banks already interested. The trial aims to boost financial innovation and ensure the secure management of digital assets.

The FSC is the country’s regulator for the virtual assets industry and is responsible for formulating clear compliance policies for its development. The commission plans to allow financial institutions to initiate thematic businesses.

The virtual asset custody trials, aimed at boosting financial innovation, will begin in the first quarter of 2025. According to a press conference earlier today by Hu Zehua, the director of the Comprehensive Planning Division of the FSC, participating financial institutions must specify the types of virtual assets they will be managing.

This initiative will enable participating banks to safeguard digital assets on behalf of their clients, focusing on cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin. Hu Zehua also mentioned that the commission will solicit public opinions for 15 days before formally accepting applications from institutions for the trial.

Three banks have already said they are interested in joining the trial. They will mainly offer custody services for professional investors and virtual asset platforms, and may extend these services to the broader public in the future.

Focus on Security and Compliance

Notably, security is a top priority for the trial. The FSC has mandated that financial institutions block any virtual assets connected to illegal activities, such as money laundering. Banks must ensure that assets from illegal sources are not held in custody to prevent the seizure of entire digital wallets.

In addition to these security measures, the FSC plans to introduce new legislation by the end of 2024. This law will provide clear guidelines for financial institutions, ensuring compliance with security standards while promoting financial innovation in the digital asset sector.

The FSC emphasized that failure to meet these requirements could result in severe consequences, including asset seizures. This proactive approach underscores Taiwan’s commitment to maintaining a secure and regulated environment for virtual asset management.

Hu Zehua pointed out that Taiwan is following global best practices for virtual asset custody.

Around the world, banks often start by offering services to virtual asset exchanges before offering them to professional investors. Then, after they have shown that they can offer these services securely, these banks offer their services to the general public.

In Taiwan’s upcoming trial, the focus will initially be on professional clients, aligning with the global trend of cautious rollouts before broader market participation.