A leading financial regulator compares virtual assets to internet gambling in a note to the banking sector.
The banking sector was advised in a notice from Taiwan’s Financial Supervisory Commission (FSC), the country’s top financial regulator, not to award virtual assets providers (VASPs) the status of merchant in transactions with credit card holders. This effectively forbids using a credit card to purchase cryptocurrency on the island.
As the local media noted on Thursday, July 21, the Financial Supervisory Commission wrote to the Association of Banks in early July to remind its members that virtual assets are extremely speculative and risky, and that it is difficult to effectively monitor transactions due to the complexity of the cash flow.
Additionally, the regulator has stated that credit cards are primarily used for consumer payments and not for investments, wealth management, or other payment methods involving highly speculative, high-risk, or highly leveraged financial activities. It made reference to the long-standing custom of prohibiting credit card holders from paying for things like online gambling, stocks, futures, and options.
Banks must comply with the new regulations within three months, per the FSC. The audit unit must next assess its internal compliance and inform the regulator of the findings.
It’s not the first time the FSC has taken action or expressed doubt about cryptocurrencies. The agency released a number of press releases last year to inform the public of the risks connected to virtual assets.
Based on the advice of the Financial Action Task Force, Taiwan updated its anti-money laundering (AML) regulations for cryptocurrency exchanges in July 2021.
The Central Bank of the Republic of China (Taiwan) Governor advocated a no-interest design for the nation’s central bank digital currency (CBDC) trial at the end of June. The second phase of Taiwan’s CBDC pilot program is presently underway, and five selected Taiwanese banks are receiving the CBDC for distribution to consumers.