Taiwan’s FSC Imposes New Regulations on VASPs: Cold Wallet Requirements and Compliance Deadlines
Taiwan’s Financial Supervisory Commission (FSC) has implemented new regulations for Virtual Asset Service Providers (VASPs), requiring them to store 70-80% of customer assets in cold wallets for enhanced security against hacks. Under the Anti-Money Laundering Act, VASPs must complete compliance declarations and register by September 2025. The FSC’s multi-stage regulatory framework now includes differentiated management based on business complexity, with further clarifications expected on potential service limitations. Meeting international standards like ISO 27001 allows VASPs to keep up to 30% of assets in hot wallets, but those not meeting standards must store at least 80% in cold wallets. The new regulation, aimed at reducing cyber attack risks, could impact VASP services related to on-chain operations. The effectiveness of relying on cold wallets remains questioned, evidenced by past incidents like the Bybit hack.
Neutral
The introduction of strict cold wallet requirements by Taiwan’s FSC presents a mixed impact on the crypto market. In the short term, compliance challenges may cause disruption for smaller VASPs, potentially leading to decreased service offerings or increased operational costs. However, larger VASPs with more resources might easily adapt, and the emphasis on security could positively assure investors about the safety of their assets, leading to a balanced view in the long-term. The first reaction could be cautious, but the potential reduction in cyber risks may stabilize the market eventually.