The Financial Technology Law Review: Taiwan

Overview

In recent years, Taiwan has adopted various initiatives to facilitate financial innovation with the development of technology. In particular, the Financial Supervisory Commission (FSC), Taiwan's financial regulator, published the 'Fintech Development Strategy Whitepaper' in May 2016 to demonstrate its commitment to fintech. In addition, an action plan designed by the FSC to develop Taiwan's financial sector was later unveiled in June 2018. The plan aims to spur financial innovation and implement a range of financial policies to respond to financial service demands.

Also, to promote fintech services and companies, the Taiwan government promulgated a law for the fintech regulatory sandbox, the FinTech Development and Innovation and Experiment Act (the Sandbox Act), on 31 January 2018, which took effect on 30 April 2018. The Sandbox Act was promulgated to enable fintech businesses to test their financial technologies in a controlled regulatory environment.

There are currently no tax incentives specifically provided for fintech companies.

Regulation

i Licensing and marketing

No special fintech licence

In Taiwan, conducting finance-related activities generally requires a licence from the FSC. However, there is no special licence specifically targeted at fintech companies. Depending on the types of regulated activities, fintech companies must meet certain qualifications as required under relevant laws and FSC regulations.

Local marketing rules

The Financial Consumer Protection Act (FCPA) and its related regulations provide for the general marketing rules applicable to marketing materials for financial services. In general, under the FCPA, when carrying out advertising, promotional or marketing activities, financial services providers should not falsify, conceal, hide or take any action that would mislead financial consumers, and should ensure the truthfulness of the advertisements.

In addition to the general marketing rules under the FCPA, financial service providers may also be subject to additional marketing rules as specified in the laws and regulations governing specific types of financial services or products.

Automated digital advisory

Although no special fintech licence exists that is specifically targeted at fintech companies, some guidelines and operating rules have been introduced in recognition that traditional licence requirements do not address fintech. For example, the FSC has approved the 'Operating Rules for Securities Investment Consulting Enterprises Using Automated Tools to Provide Consulting Service (Robo-Adviser)' (the Robo-Adviser Rules) issued by the Securities Investment Trust and Consulting Association of Taiwan, Taiwan's self-disciplinary organisation of the asset management industry. Pursuant to the Robo-Adviser Rules, licensed securities investment consulting enterprises may provide online securities investment consulting services by using automated tools through algorithms (robo-adviser services), and must comply with certain rules, including the following:

  1. there should be a periodical review of the algorithm;
  2. relevant know-your-customer procedures should be conducted before provision of advice;
  3. a special committee should be established to supervise the adequacy of the robo-adviser services; and
  4. the customers should be informed of precautions before using robo-adviser services.

With respect to the requirements of the robo-adviser's rebalancing transactions, on 18 November 2021 the FSC further loosened restrictions where the investment portfolios agreed between the robo-adviser and its clients are securities investment trust funds or offshore funds that are approved by, or registered with, the FSC, and the rebalancing transactions can be executed on the following conditions:

  1. they adhere to the funds list agreed with the client in advance (up to 30 funds); and
  2. the aggregate absolute value of the change in the investment proportion of each investment portfolio does not exceed 60 per cent.

Credit information service

Pursuant to the Banking Act and relevant regulations, an entity collecting credit-related information from financial institutions, processing this information and maintaining the relevant database and providing credit-related information and records to financial institutions for credit checking purposes must obtain prior approval from the FSC. Currently, the Joint Credit Information Center (JCIC) is the only FSC authorised entity that offers such services. In practice, a bank would normally review the credit information or records provided by the JCIC as part of the bank's credit investigation on an applicant for a credit extension.

If an entity is not considered as offering such services, no FSC approval is required, but it will still be subject to the Personal Data Protection Act (PDPA) regarding its collection and use of any personal data.

ii Cross-border issues

There is no concept of a 'passporting right' in Taiwan. To engage in regulated financial activities, a company needs to apply for the relevant licences to the FSC. As mentioned above, depending on the types of regulated activities, the applicant must meet certain qualifications as required under relevant laws and FSC regulations. Also, under current financial laws and regulations, no person is allowed to provide any financial services in Taiwan without obtaining prior approval or a licence from the FSC.

As for foreign exchange-related restrictions, for each calendar year, a Taiwanese company may, upon filing a report with the Central Bank of the Republic of China (Taiwan) (the Central Bank), purchase foreign currency with Taiwan dollars and remit the foreign currency out of Taiwan for purposes other than trade or service-related payments, in an amount up to US$50 million or its equivalent without special approval from the Central Bank. Foreign exchange purchase for purposes other than trade or service-related payments exceeding the applicable ceiling would require special approval from the Central Bank. This approval is discretionary and is decided by the Central Bank on a case-by-case basis. An amendment to grant the Central Bank the power to adjust the above-mentioned foreign exchange quota became effective in June 2021.

Digital identity and onboarding

Taiwan's Ministry of Interior has developed a mechanism called the Citizen Digital Certificate. With such Certificate, certain types of governmental applications may be submitted and handled online, without the need to go to the government's physical office in person. For example, certain tax filings may be done with such certificate. However, such certificate may not be considered a generally recognised digital identity in Taiwan.

The Minister of the National Development Council, a policy-planning authority of Taiwan, announced in 2018 that, to promote digital transformation in Taiwan and elevate the efficiency of public services, Taiwan Digital ID Cards were planned to be distributed in the second half of 2020. However, because of privacy and cybersecurity concerns, the exact details of the policy are still under discussion.

With regard to digitised onboarding of clients, a customer is generally permitted to open a digital bank account online in accordance with, and subject to, the scrutiny practice published by the Bankers Association of the Republic of China (the Bankers Association).

Also, in 2018, Taiwan's financial regulator, the FSC, promulgated relevant regulations governing the establishment of 'digital-only' banks, which refer to banks without physical branches. Following the promulgation of these regulations, three applications to set up digital-only banks were filed with the FSC in early 2019, all of which were approved by the FSC on 30 July 2019. According to FSC press releases, the banks received banking licences from the FSC in December 2020, February 2021 and December 2021. It is generally anticipated that the establishment of digital-only banks will encourage cross-industry combinations and fintech applications for everyday life by building a fintech ecosystem.

The FSC has been adjusting its position towards supervision of digital-only banks, focusing on topics such as real-time monitoring of liquidity risk and other important digital bank matters, as well as the introduction of suptech (supervisory technology) and regtech (regulatory technology) into the supervision and surveillance of digital banks' business activities. Along with the development of the digital-only banking sector in Taiwan, it is expected that digitised onboarding will prevail in Taiwan and the cooperation between players in different industries will be even closer in such a fintech ecosystem.

Digital markets, payment services and funding

i Digital marketplaces

Except for certain rulings and regulations governing security tokens (i.e., the security token offerings (STO) rules as defined and explained below) and anti-money laundering (as further explained below), no Taiwanese laws or regulations have been specifically promulgated or amended to formally regulate digital assets, cryptoassets or their marketplaces.

The issuing, trading and possessing of security tokens is governed by the STO rules (as defined below), though the current regulatory regime of Taiwan imposes no restriction or prohibition on owning or possessing cryptoassets without the nature of securities or any other financial products of services.

ii Collective investment scheme

Local funds (securities investment trust funds)

The most common form of collective investment scheme in Taiwan is securities investment trust funds, which may be offered to the general public or privately placed to specified persons. Public offering of a securities investment trust fund needs prior approval or effective registration with the FSC or the institution designated by the FSC. No prior approval is required for a private placement of a securities investment trust fund; however, it can only be placed with eligible investors and within five days of the payment of the subscription price for initial investment offering. A report on the private placement should be filed with the FSC or the institution designated by the FSC. Under current laws and regulations, public offering and private placement of securities investment trust funds may only be conducted by FSC-licensed securities investment trust enterprises (SITEs). Currently, the paid-in capital of a SITE should not be lower than NT$300 million, and certain qualifications exist for the shareholders of a SITE. A fintech company that is not a SITE will not be able to raise funds in the same way as a SITE.

Offshore funds

Offshore funds with the nature of a securities investment trust fund may also be publicly offered (subject to FSC prior approval) or privately placed (subject to post-filing with the FSC or its designated institution) to Taiwan investors, subject to certain qualifications and conditions. An offshore fintech company that does not have the nature of a securities investment trust fund will not be able to be offered in Taiwan.

iii Crowdfunding

The following two ways of fundraising are generally known as the equity-based crowdfunding platforms in Taiwan. These ways of crowdfunding are exempted from the prior approval or effective registration normally required under the Securities and Exchange Act (SEA).

The 'Go Incubation Board for Start-up and Acceleration Firms' of the Taipei Exchange

The Taipei Exchange (TPEx), one of the two securities exchanges in Taiwan, established the Go Incubation Board for Start-up and Acceleration Firms (GISA) in 2014 for the purpose of assisting innovative and creative small non-public companies in raising capital. The regulations governing the GISA were amended in December 2018. A company with innovative or creative ideas with potential for development is qualified to apply for GISA registration with TPEx. After TPEx has approved the application, the company will start receiving counselling services from TPEx regarding accounting, internal control, marketing and legal affairs. After the counselling period, there is another TPEx review to examine, among other things, the company's management teams, the role of board of directors, accounting and internal control systems, and the reasonableness and feasibility of the plan for capital raising, and, if the TPEx deems it appropriate, the company may raise capital on the GISA. The amount raised by the company through the GISA may not exceed NT$30 million unless otherwise approved. In addition, an investor's annual maximum amount of investment through the GISA should not exceed NT$150,000, except for angel investors defined by TPEx or wealthy individuals with assets exceeding an amount set by TPEx and having professional knowledge regarding financial products or trading experience.

Equity-based crowdfunding on the platforms of securities firms

A securities firm may also establish a crowdfunding platform and conduct equity crowdfunding business. Currently, a company with paid-in capital of less than NT$50 million may enter into a contract with a qualified securities firm to raise funds through the crowdfunding platform maintained by the securities firm, provided that the total amount of funds raised by the company through all securities firms' crowdfunding platforms does not exceed NT$30 million in a year. The amount of investment made by an investor on a securities firm's platform may not exceed NT$150,000 in aggregate in a year, except for angel investors as defined in the relevant TPEx regulations, individuals with assets exceeding NT$30 million and professional knowledge of financial products or trading experience, and insiders of the company.

iv Peer-to-peer lending

While, to date, there are no laws or regulations specifically regulating or governing peer-to-peer lending, the Bankers Association has promulgated a set of Self-Disciplinary Rules of Business Cooperation between Member Banks of Bankers Association and Peer-to-Peer Lending Operators (the P2P Self-Disciplinary Rules), which has been filed with the FSC.

According to the P2P Self-Disciplinary Rules, banks may work together with the peer-to-peer lending operators on the following businesses:

  1. a bank providing a fund custodian service;
  2. a bank providing a cash flow service;
  3. a bank providing credit review and rating services;
  4. a bank extending a facility to the customer (i.e., the peer-to-bank model);
  5. advertising and marketing activities; and
  6. a bank providing a credit document custody service.

v Loans trading

The general principle under Taiwan's Civil Code is that any receivable is assignable unless:

  1. the nature of the receivable does not permit the transfer;
  2. the parties to the loan have agreed that the receivable shall not be transferred; or
  3. the receivable, in nature, is not legally attachable.

Receivables under loans, subject to (b), above, are generally transferable; however, a bank is subject to stricter rules specifying that, in general, loans that continue to perform cannot be transferred by a bank except for limited exceptions (such as for the purpose of securitisation). For this reason, Taiwan does not currently have an active secondary loan market.

vi Payment services

Traditionally, payments by wire transfer can only be made through a licensed bank. Payments via cheques and credit cards are also run through banks. Non-banks engaging in credit card-related business and issuance of electronic stored-value cards should also obtain approval from the FSC. In 2015, the Act Governing Electronic Payment Institutions (the E-Payment Act) was enacted. This E-Payment Act regulates the activities of an electronic payment institution, acting in the capacity of an intermediary between payers and recipients to engage. In December 2020, the Legislative Yuan of Taiwan passed an amendment to the E-Payment Act, which took effect in July 2021. The amendment merges the E-Payment Act and the Act Governing Issuance of Electronic Stored Value Cards (E-Card Act) to expand the current businesses of electronic payment institutions and electronic stored value cards institutions, and build up an integrated e-payment ecosystem. The main amendments in the newly amended E-Payment Act include:

  1. consolidating the legal regimes of different types of electronic payment methods;
  2. expanding the scope of businesses of electronic payment institutions, such as small amount cross-border remittance services or transmission of receipt or payment information among contracted merchants, which was previously regulated in the E-Card Act;
  3. permitting the cash flow-related service among institutions so as to meet the payment requisite of fund transmission and payment channel sharing; and
  4. creating a friendly regulatory environment for industry, enhancing the competitiveness of the industry and retaining the supervision flexibility of the regulator.

Cryptocurrencies, initial coin offerings (ICO) and security tokens

There were previously no legal or regulatory rules or guidelines in relation to blockchain technology in Taiwan. However, with the rise of certain applications of blockchain technology such as virtual currencies or cryptocurrencies, Taiwan's regulators have issued several press releases to announce their positions and attitude towards these developments, as well as to educate and warn the general public in Taiwan. Further, the FSC promulgated certain regulations on cryptocurrencies with the nature of securities, which is described in detail below.

On 30 December 2013, both the Central Bank and the FSC first expressed the government's position towards Bitcoin by issuing a joint press release (the 2013 Release). According to the 2013 Release, the two authorities held that Bitcoin should not be considered a currency, but a highly speculative digital virtual commodity. In another FSC press release in 2014, the FSC ordered that local banks must not accept Bitcoin or provide any other services related to Bitcoin (such as exchange Bitcoin for fiat currency). These government positions were reiterated by the FSC in an FSC press release on 19 December 2017 (the 2017 Release).

Given the above, in light of the authorities' attitude, Bitcoin is not considered to be legal tender, currency or a generally accepted medium of exchange under the current regulatory regime in Taiwan; instead, it is deemed a digital virtual commodity. The government's attitude, stated in the above-mentioned press releases, only covers Bitcoin, and not any other types of virtual currency or cryptocurrency (except for ICOs, as further explained below). However, we tend to think that any other virtual currencies or cryptocurrencies with the same nature and characteristics as Bitcoin should also be considered as digital virtual commodities.

i ICOs, token offerings and STOs

In response to the rising number of ICOs and other investment activity relating to virtual currencies or cryptocurrencies, the FSC also expressed the following views on ICOs through the 2017 Release, as mentioned above.

  1. An ICO refers to the issue and sale of virtual commodities (such as digital interests, digital assets or digital virtual currencies) to investors. The classification of an ICO should be determined on a case-by-case basis. For example, if an ICO involves the offer and issue of securities, it should be subject to Taiwan's SEA. The issue of whether tokens in an ICO would be deemed securities under the SEA would depend on the facts of each individual case.
  2. If any misrepresentations with respect to technologies or their outcomes or promises of unreasonably high returns are used by the issuer of virtual currencies or an ICO to attract investors, the issuer would be deemed as committing fraud or illegal fundraising.

Given the above, in an ICO (or other types of token offering, such as private token presale before the ICO stage), the core issue in this regard is whether an ICO would be considered as issuing securities under Taiwan's securities regulations. Under current Taiwanese law, the offer and sale of securities in Taiwan, whether through public offering or private placement, are regulated activities and shall be governed in accordance with the SEA, its related regulations and relevant rulings issued by the FSC.

On 3 July 2019, the FSC, by issuing a ruling, officially designated cryptocurrencies with the nature of securities (i.e., security tokens) under the SEA (the 2019 Ruling). According to the 2019 Ruling, security tokens refer to those that:

  1. utilise cryptography, distributed ledger technology or other similar technologies to represent their value that can be stored, exchanged or transferred through digital mechanisms;
  2. are transferable; and
  3. encompass the following attributes of an investment:
    • funding provided by investors;
    • funding provided for a common enterprise or project;
    • investors expecting to receive profits; and
    • profits generated primarily on the efforts of the issuer or third parties.

In addition to the 2019 Ruling, the FSC issued a press release on 27 June 2019 to illustrate the key points of its policy on STOs. Since then, the FSC and the TPEx have set out the regulations governing STOs (the STO rules), which were finalised in January 2020. Specifically, the FSC differentiates the regulation of STOs with the threshold of NT$30 million. For an STO of NT$30 million or less, the STO may be conducted in compliance with the STO rules; an STO above NT$30 million must first apply to be tested in the 'financial regulatory sandbox' pursuant to the Sandbox Act and, if the experiment has a positive outcome, should be conducted pursuant to the SEA. See the summary below of certain other major provisions of the STO rules (i.e., for STOs of NT$30 million or less).

Regulations on issuance (primary market)

Qualifications of the issuer

The issuer must be a company limited by shares incorporated under the laws of Taiwan and not a company listed on the Taiwan Stock Exchange or TPEx or traded on the Emerging Stock Market. This indicates that a foreign entity may not act as an issuer of an STO programme.

Types of security tokens that can be issued

The issuer can only issue profit-sharing or debt tokens without shareholders' rights, meaning that shares – which are a type of security under the SEA, with regular shareholders' rights of issuers – cannot be issued in the form of security tokens while bonds can be issued as debt tokens.

Eligible investors and amount limits

Currently, only 'professional investors' are eligible for STOs; where the professional investor is a natural person, the maximum subscription amount is NT$300,000 per STO. Nonetheless, the FSC issued a press release in January 2022 (the 2022 press release) advising that it plans to expand the scope of eligible investors to foreign persons under the STO rules.

Issuance process

Issuers must conduct STOs on a single platform, and the platform operator has the obligation to ensure that the issuer meets the relevant qualifications and that the prospectus is well prepared. Where the platform operator itself is an STO issuer, the issuer should not launch an STO without a prior review by TPEx.

Regulations on trading (secondary market)

Trading mechanism of security tokens

The platform operator should obtain a securities dealer licence and handle the trading by way of price negotiation. The platform operator should be the counterparty to every transaction and should offer a reasonable reference quotation based on the market conditions. In addition, each security token under an STO programme may be traded only on a single platform.

Maximum transaction amount

Where the professional investor is a natural person, the maximum amount of holding under an STO programme is NT$300,000. In addition, the maximum daily transaction limit for each STO is 50 per cent of the total issuance amount under the STO programme.

STO platform operator

Qualifications of the platform operator

The platform operator should obtain a securities dealer licence, have minimum paid-in capital of NT$100 million and provide an operation bond in the amount of NT$10 million.

Total offering amount capacity

The 2022 press release further set forth the plan for amending the STO rules. The TPEx amended the STO rules on 21 January 2022, adjusting the total offering amount of all STOs on a single platform to a maximum of NT$200 million. A platform may process a second STO six months after the security tokens of the first STO have been traded on the platform.

Transfer and record keeping

The platform operator should enter into an agreement with the Taiwan Depository and Clearing Corporation (TDCC) and transmit trading information, such as balance changes and balance statements, to the TDCC on a daily basis, for record-keeping purposes. The TDCC should provide STO balance enquiry services to investors.

Subscription and trading

Subscription and trading of security tokens should be conducted on a real-name basis and the transactions must be conducted in New Taiwan dollars (NT$) under the same name as that featuring on the bank account.

ii Anti-money laundering

The latest amendment to the Money Laundering Control Act (MLCA) has brought the 'virtual currency platforms and trading business' into Taiwan's anti-money laundering (AML) regulatory regime, under which enterprises falling within the designated scope will be subject to the relevant rules applicable to financial institutions under the MLCA.

Pursuant to the MLCA, the Taiwan Cabinet issued an executive order on 7 April 2021 under which 'the cryptoasset trading platforms and related transaction businesses' refer to those using 'cryptography and distributed ledger technology or other similar technologies that can be digitally stored, exchanged, or transferred, and can be used for payment or investment purposes' to conduct any of the following services:

  1. exchange between cryptoassets and Taiwan dollars, foreign currencies or currencies issued by mainland China, Hong Kong or Macao;
  2. exchange between cryptoassets;
  3. transfer of cryptoassets;
  4. custody or administration of cryptoassets or provision of instruments enabling control over cryptoassets; and
  5. participation in, and provision of, financial services related to the issuance or sale of cryptoassets.

Subsequently, the FSC published the Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises of Cryptoasset Platforms and Trading Business (the AML Regulations) on 22 June 2021. According to the AML Regulations, operators providing the above-mentioned services are required to establish, among other things, an internal control and audit mechanism, a procedure for reporting suspicious transactions and a know-your-customer procedure.

Other new business models

The legal implications of any new business model should be examined on a case-by-case basis. Unless otherwise provided by law, the legal effect of an action should not be different simply because a new technology is applied. For example, while no specific rules exist that are applicable to the use of a new technology, such as artificial intelligence or automated technology, when offering financial services (except for the 'automated digital advisory', as discussed above), a financial institution (such as a bank) may still be subject to relevant outsourcing regulations if the use of a technology could be considered as banks outsourcing their operations.

For example, consider self-executing contracts (i.e., smart contracts based on blockchain technology). As a general rule, in Taiwan contracts can be formed by a meeting of the minds, and they can be expressed and proven by way of electronic records, including smart contracts, unless otherwise provided by law. An example of an instance in which a smart contract may not be enforceable is the transfer of real estate, as this requires registration with the regulator and thus may not be completely implemented solely with a smart contract.

Intellectual property and data protection

The issue here would be whether fintech business models and related software can be protected by intellectual property rights such as copyright or patent rights.

i Copyright

Under Taiwan's Copyright Act, there are no registration or filing requirements for copyright to be protected by law. However, there are certain features that qualify for copyright, such as originality and expression. Therefore, while there is a type of copyright called 'computer program copyright' under Taiwan's Copyright Act, whether a work is copyrightable would still depend on whether the subject work has the required components (such as the features described above), especially the feature 'expression' (instead of simply an 'abstract idea'). As to new copyright developed by an employee of a company during the course of employment, where a work is completed by an employee within the scope of employment, the employee is the author of the work while the economic rights to the work will be held by the employer unless otherwise agreed by the parties. As to new copyright developed by a contractor, the contractor who actually makes the work is the author of the work unless otherwise agreed by the parties; the possession of the economic rights arising from the work should be agreed by the parties, or these rights should be held by the contractor in the absence of such an agreement. However, the commissioning party may use the work.

ii Patent

As to patent, an inventor may file an application with Taiwan's Intellectual Property Office, and the patent right will be obtained once the application is approved. According to the Patent Act of Taiwan, the subject of a patent right is 'invention' and an invention means the creation of technical ideas, utilising the laws of nature. As a general rule, business methods are regarded as using social or business rules rather than laws of nature, and therefore may not be the subject of a patent right. As for a fintech-related software invention, if it coordinates the software and hardware to process the information, and there is a technical effect in its operation, it might become patentable. For instance, a 'method of conducting foreign exchange transaction' would be deemed as a business method and thus not patentable; however, a 'method of using financial information systems to process foreign exchange transactions' may be patentable. As to a new patent developed by an employee of a company during the course of employment, the right of an invention made by an employee during the course of performing his or her duties under employment will be vested in his or her employer and the employer should pay the employee reasonable remuneration unless otherwise agreed by the parties. As to a new invention developed by a contractor, the agreement between the parties should prevail, or the rights should be vested in the inventor or developer in the absence of such an agreement. However, if there is a fund provider, the funder may use the invention.

iii Data protection

In Taiwan, personal information is protected by Taiwan's PDPA; the collection, processing and use of any personal data are generally subject to notice and consent requirements under the PDPA. Pursuant to the PDPA, personal data is defined broadly as: the name, date of birth, ID card number, passport number, characteristics, fingerprints, marital status, family, education, occupation, medical record, medical treatment, genetic information, sexual life, health examination, criminal record, contact information, financial conditions, social activities and other information that may directly or indirectly identify an individual.

Under the PDPA, unless otherwise specified under law, a company is generally required to give notice to (notice requirement) and obtain consent from (consent requirement) an individual before collecting, processing or using any of the individual's personal information, subject to certain exemptions. To satisfy the notice requirement, certain matters must be communicated to the individual, such as the purposes for which his or her data is collected, the type of the personal data and the term, area and persons authorised to use the data.

Given the above, if a fintech company wishes to collect, process or use any personal data, it will be subject to the obligations under the PDPA, as discussed above.

Year in review

Non-fungible tokens and stablecoin

New applications of cryptocurrency and blockchain technology, such as non-fungible tokens (NFTs), have been widely discussed in Taiwan recently. Currently, there are no regulations specifically addressing the rise and development of NFTs in Taiwan. From a local law perspective, the classification of any NFT and related activities or transactions should be determined on a case-by-case basis, and one can only resort to existing laws and regulations to analyse this. In November 2021, it was reported by local news that the chairperson of the FSC advised a congressman that NFTs are currently considered as 'art creation', so the sale of these should not be deemed as the offering of virtual currency. Notwithstanding the above, we cannot completely rule out the applicability of financial law and securities regulations if there are multiple NFTs that are linked to, or represent, the same asset and the NFTs have an investment characteristic.

Separately, the Central Bank cautioned that stablecoins are mainly used for speculative investment transactions involving other cryptoassets and are not as stable as they are meant to be. Furthermore, in the future, stablecoins may be viewed more as a payment instrument, as well as a fundamental part of the business of a bank engaging in deposit-taking, and therefore shall be subject to the applicable laws and regulations such as the E-payment Act and the Banking Act. According to relevant news reports, the Taiwan regulator is demonstrating its continuous and committed attitude towards monitoring the development of the regulation of stablecoins in the international community. Competent Taiwanese authorities are prone to follow international standards when determining the level of regulation to be imposed on cryptocurrencies, and it is therefore worth paying close attention to the development of regulation on stablecoins in the international community.

Outlook and conclusions

Recently, in light of the development of blockchain technologies, metaverse trends have also spurred on the market in Taiwan. Metaverse, a term that combines the prefix 'meta', meaning beyond, and 'universe', generally refers to highly interactive virtual worlds or digital spaces that can be accessed with technologies such as augmented reality, virtual reality and mobile devices. NFTs are perceived as a crucial element of this. However, while the discussion and application of the metaverse and NFTs continue to grow in the market, there are currently no specific laws or regulations promulgated by the Taiwanese government to regulate or provide a legal basis for the development of the metaverse.

Footnotes

1 Abe T S Sung is a partner and Eddie Hsiung is an associate partner at Lee and Li, Attorneys-at-Law.

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