Taiwan once strongly supported blockchain technology and branded itself as Asia’s “Blockchain Island.” However, strict anti-money laundering and investor protection policies restricted corporate entry.
Recently, there have been signs of change. Major companies such as FamilyMart and Taiwan Mobile have introduced blockchain. The government has also eased its stance, supporting CBDC development and allowing investment in overseas crypto ETFs.
The launch of the VASP Association has accelerated growth due to improved regulations and increased adoption of Web3. However, external risks such as Taiwan’s international situation remain important considerations.
Former Taiwanese Legislative Councilor Jason Hsu’s speech at Blockfesta, Source: Blockfesta 2018
Taiwan has previously demonstrated strong ambitions to become a “blockchain island” as the number of blockchain companies steadily increases. But in the wake of the FTX crisis, which affected 300,000 people and caused losses of about $400 million, Taiwan took a more conservative stance. Currently, the focus is on investor protection and market stability rather than revitalizing the Web3 industry.
Almost a year has passed since our last report, and there are clear changes in the Taiwanese market. Local virtual asset service providers (VASPs) have established a self-regulatory organization and the government has relaxed its stance on blockchain technology. Major companies are currently adopting blockchain, driving market growth. This report examines trends in Taiwan’s Web3 market and explores whether Taiwan can truly become a “blockchain island.”
The Taiwanese government initially announced ambitious plans to use blockchain technology as a national growth engine. However, the focus has shifted towards investor protection rather than active industry support. It imposed anti-money laundering obligations on VASPs in 2021 and introduced investor protection guidelines for exchanges in late 2023.
Source: Taiwan Virtual Asset Service Provider Industry Association
Taiwan continues to focus on building a stable market environment. This focus is evidenced by the establishment of the Taiwan Virtual Asset Service Provider Industry Association (VASP Association) in June. The association was founded by 24 licensed VASP companies and includes major exchanges such as MaiCoin and BitoPro. We are working with the Financial Supervisory Commission (FSC) to draft legislation to support the growth of the crypto industry. Key goals include building an anti-money laundering and anti-terrorist financing framework and developing a classification and rating system for crypto service providers. These initiatives aim to strengthen market resilience.
The Taiwanese government emphasizes maintaining a balance between autonomy and regulation for the VASP Association. This approach is intended to support both investor protection and the growth of Web3 companies. It remains to be seen whether this increased autonomy will foster the healthy development of the Web3 industry.
Taiwanese regulators in June announced plans to allow investment in foreign crypto ETFs and allow investments by September. However, only institutional investors, professional investor corporations, and professional individual investors are allowed, with minimum safety measures in place. This is in contrast to South Korea, which restricts investment in foreign crypto ETFs. The Taiwanese government is gradually shifting away from its conservative stance on virtual currency regulation, while balancing growth and risk management. It will be interesting to see whether the establishment of the VASP Association will further ease the virtual currency exchange market.
Taiwan has been developing and researching a central bank digital currency (CBDC) since 2019. Last year, a retail CBDC prototype was deemed viable for Taiwan’s 23 million people. However, as one of the most cash-intensive countries in the world, Taiwan faces questions about the practicality of retail CBDCs.
Real-world data supports these concerns. Despite the rise in electronic payments since the pandemic, cash usage in Taiwan is expected to account for 42% of total payments in 2023. This rate is twice that of South Korea and China. Cash payments for e-commerce are also more common in Taiwan than in other countries. These trends indicate that Taiwanese people are highly cash-oriented. This priority limits the cost-effectiveness of retail CBDCs.
After testing retail CBDC, Taiwan is currently focusing on developing wholesale CBDC. Central bank governor Yang Qinglong announced plans to test a large-scale CBDC prototype later this year. The central bank is prioritizing stability over speed of development, and a cautious approach is expected. The goal is to investigate how wholesale CBDCs can work in specific scenarios. This approach aims to examine the impact on the stability and efficiency of the financial system.
In October, Taiwan’s FSC announced plans to allow banks to pilot digital asset custody services starting in the first quarter of next year. Currently, three Taiwanese commercial banks and several securities companies have expressed interest. However, due to capital size, this service will mainly focus on banks. FSC focuses on security and anti-money laundering given the large amount of assets involved. The service will initially target cryptocurrency exchanges and will gradually expand to professional investors.
Source: Vitopro
Taiwanese companies are beginning to implement Web3 services. This trend signals a shift in the market. Taiwanese digital banking platform Bankee has partnered with Bitopro exchange to launch a crypto-friendly bank account service. This service still requires bank account and exchange integration. However, it improves user convenience by allowing you to instantly top up Taiwan dollars directly from the currency exchange app. This partnership between traditional financial institutions and exchanges marks a new phase for Taiwan’s Web3 market.
Source: BitoGroup
FamilyMart has introduced “Point to Crypto” service. This will allow customers to exchange loyalty points for cryptocurrencies such as BTC, ETH, USDC, and USDT. The service was developed in partnership with stablecoin issuer Circle and Bito Group, which operates the BitoPro exchange. The initiative by FamilyMart, Taiwan’s largest convenience store chain, is expected to significantly enhance public access to cryptocurrencies.
Source: Taiwan Mobile
Meanwhile, Taiwan Mobile, Taiwan’s second-largest telecommunications company, is preparing to enter the cryptocurrency business. Its subsidiary Fu Sheng Digital has obtained a VASP license. This move signals the first step towards partnering with VASP or launching its own crypto platform. Locally, many expect Taiwan Mobile to work with exchanges to expand its cryptocurrency use cases. Although specific plans have not yet been disclosed, Taiwan Mobile’s acquisition of the VASP license is expected to have a significant impact on the market.
Companies considering entering Taiwan should also monitor the international situation. Geopolitical risks such as the Russia-Ukraine war, the ongoing conflict in the Middle East, and tensions with China have added to the uncertainty of doing business in Taiwan. Careful risk management is essential.
Despite these challenges, the Taiwanese market shows significant growth potential. The domestic Web3 market is expanding, and the number of Web3-related hires has more than doubled compared to the previous year. International interest is also growing, highlighted by events such as Taipei Blockchain Week and Asia Blockchain Summit 2024.
However, Taiwan still needs time to fully establish itself as a “blockchain island.” The country lacks strong policies to foster a Web3 industry and is cautiously implementing regulations. Taiwan continues to observe neighboring countries such as Japan and South Korea before charting its own regulatory path. More aggressive steps are needed for Taiwan to become a major player in the global Web3 market.
Read more reports related to this study.
This report has been prepared based on material believed to be reliable. However, we do not guarantee the accuracy, completeness, or suitability of the information, express or implied. We are not responsible for any loss arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the views of others or other organizations .
This document is for informational purposes only and does not constitute legal, business, investment, or tax advice. References to securities or digital assets are for illustrative purposes only and do not constitute investment recommendations or the provision of investment advisory services. This material is not intended for investors or potential investors.
Tiger Research allows fair use of the report. “Fair use” is a general principle that allows certain content to be used for public benefit purposes as long as the commercial value of the material is not compromised. Reports may be used without prior permission as long as the use is consistent with the purpose of fair use. However, when citing Tiger Research reports, it is mandatory to 1) cite “Tiger Research” as the source and 2) include the Tiger Research logo (black/white). If you wish to reconfigure and publish it, separate negotiations will be required. Unauthorized use of reports may result in legal action.
