Taiwan's Financial Regulator Takes Friendly Approach to ICOs

Taiwan's financial regulator has announced a thoughtful approach to initial coin offerings and cryptocurrencies like bitcoin. The comments by Wellington Koo, Chairman of Taiwan's Financial Supervisory Commission, was in response to a request by a congressman at a parliamentary session. The official stance of the regulator is to take a measured approach at odds with the hardline stances by China and South Korea. Koo's statement comes amidst a tidal wave of pronouncements on ICOs and virtual currencies by authorities across the world.

Initial Coin offerings are a new blockchain powered crowdfunding mechanism. Startups raise money from investors by accepting cryptocurrency and issuing back digital tokens. Over $2 billion of investment capital has flown into ICOs in just under 12 months. But the method has come under increasing backlash from critics and regulators.

Jason Hsu, a legislator representing Taiwan's Kuomintang Party (KMT), made a formal request to the regulator on its position on virtual currencies and initial coin offerings. Taiwan's KMT Nationalist party has long been an advocate of deregulation and supportive of Fintech. In light of China, Hong Kong, South Korea, Macau and Thailand's recent statements on the same, the congressman said in a quote on News Lens:

"Just because China and South Korea are banning, doesn't mean that Taiwan should follow suit – there is a huge opportunity for growth in the future. We should emulate Japan, where they treat cryptocurrency as a highly regulated, highly monitored industry like securities."

While not a ringing endorsement of ICOs, the regulatory chief's comments buck the trend of the tone of recent announcements by financial agencies in other countries. Koo maintained there would be no outright ban on crypto-related activities.

The chairman went on to pledge support for the country's innovators to experiment with distributed ledger technology and cryptocurrency. Part of today's parliamentary session will be passing of the "Financial Technology Innovation Experimentation Act." The bill will set in motion the establishment of a fintech sandbox to harbor blockchain and cryptocurrency related startups in a deregulated space.

On September 4, Chinese regulators opted for an all-out ban on ICOs in the mainland going as far as shutting down exchanges. The opinion of almost all regulators to date has been ICOs are potentially securities that call for regulation under securities law. Just yesterday, Wikipedia founder Jimmy Wales labeled ICOs as ‘absolute scams' and warned investors to be vigilant.

Taiwan's comments by the Financial Supervisory Commission are a breath of fresh air in an industry that seems to be always under hostile attacks.