Sebastian Sinclair

Taiwan authorities have arrested an individual suspected of laundering a record 10.4 billion Taiwanese dollars ($320 million) via digital assets. This marks the largest single case of crypto-related money laundering in the island nation&#8217;s history.



Identified only by the surname Qiu, the suspect was arrested in June upon his return from a trip to Southeast Asia, according to Taichung&#8217;s Criminal Investigation Bureau and local <a href="https://www.taiwanplus.com/news/taiwan-news/crime/231031022/taiwan-police-make-record-crypto-money-laundering-bust">media</a>.



The case emerged from an investigation initiated last year into a fake securities trading app. A probe led authorities to trace financial transactions, ultimately revealing Qiu&#8217;s alleged involvement in the scheme.



Law enforcement officials report that Qiu funneled money through multiple accounts. He exchanged them for tether (<a href="https://blockworks.co/price/usdt">USDT</a>) — a crypto pegged to the US dollar — and then sold the digital asset to convert it back into cash with the goal of obscuring the origin of the funds.



Qiu allegedly profited by taking a 1% commission from each transaction, and he also traveled frequently to Southeast Asian countries. These include Malaysia and the Philippines, where he is suspected of having connections with gambling and fraud syndicates.&nbsp;



Authorities seized several luxury items from Qiu, including high-end vehicles and expensive watches. They also confiscated 21,000 Taiwanese dollars ($647) in cash, laptops, financial cards and other evidence.



Three additional suspects were also arrested in connection with the case, as authorities continue to investigate the source and destination of the laundered funds.&nbsp;



Taiwan, along with several other Asian jurisdictions, is intensifying its anti-money laundering regulations for cryptocurrencies. The case is expected to add impetus to these efforts, <a href="https://blockworks.co/news/hong-kong-crypto-oversight">similar to recent events in Hong Kong</a>.



Taiwan’s Financial Supervisory Commission (FSC) <a href="https://blockworks.co/news/taiwan-bans-crypto-purchases-using-credit-cards">penned a letter to the banking industry</a> in July, prohibiting individuals from purchasing digital assets using credit cards.



The regulator labeled digital assets as highly volatile and speculative while stipulating credit cards should not be used for transactions involving gambling, stocks and derivatives.



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Taiwanese authorities seize $320M in country’s largest crypto laundering scheme

Shalini Nagarajan

In Taiwan, the top financial watchdog is set to become the main oversight body for the local crypto industry, in what would mark a first for East Asia.



Financial Supervisory Commission (FSC) chairman Huang Tien-mu said in parliament Monday that initially only crypto payments and transactions will come under his agency’s ambit, Reuters reported. 



The FSC regulates securities markets, insurance providers and the banking sector. The only key rule for crypto, for now, is that domestic platforms are meant to comply with anti-money laundering rules. 



Huang <a href="https://www.reuters.com/technology/taiwan-financial-regulator-says-will-oversee-crypto-currencies-2023-03-20/" target="_blank" rel="noreferrer noopener">reportedly</a> said it’s too early to debate forming separate legislation especially for crypto. He&#8217;s also yet to discuss details around self-regulation and other aspects of the crypto industry with governmental departments. 



The official appointment of the FSC is expected to be made by the end of March, per <a href="https://www.bloomberg.com/news/articles/2023-03-20/taiwan-s-fsc-set-to-be-named-as-main-crypto-regulatory-body" target="_blank" rel="noreferrer noopener">Bloomberg</a>, which cited a person familiar with the matter. 



Non-fungible tokens (NFTs) won’t fall under the FSC’s purview and could instead be assigned to another department, such as the IT-focused Digital Affairs Ministry. Stablecoins could have an association with the central bank.



While crypto has been outright banned in nearby mainland China since 2021, Taiwan instead introduced anti-money laundering laws for crypto services providers in July of that year.&nbsp;



One year later, some 24 crypto firms registered under Taiwan’s Money Laundering Control Act including MaiCoin, BitoPro and XREX.



In the first half of 2022, crypto trading volumes in Taiwan <a href="https://restofworld.org/2023/taiwan-asia-crypto-capital/" target="_blank" rel="noreferrer noopener">shot up</a> more than 30%. Its biggest crypto exchange MaiCoin saw over $20 million in daily trading volume (for scale, Coinbase currently processes about $2 billion per day, according to CoinGecko).



Taiwan moving to formally regulate crypto payments comes after a chaotic year for cryptocurrencies, earmarked by crypto exchange FTX filing for bankruptcy in November, having failed to handle an $8-billion-plus influx of user withdrawals.&nbsp;



Regulators around the world have called for more scrutiny of crypto exchanges and warned investors of risks associated with digital assets.



The securities watchdog <a href="https://blockworks.co/news/taiwan-bans-crypto-purchases-using-credit-cards" target="_blank" rel="noreferrer noopener">banned</a> digital asset transactions via credit cards in July, asking the banking industry not to grant “merchant status” to crypto service providers.



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Taiwan Securities Watchdog Will Regulate Crypto — But Not NFTs

In Taiwan, certain types of property owned by public servants worth more than NT$1 million ($32,900) are subject to disclosure — but not crypto.



Valuable items including cash, deposits, securities and paintings belonging to government officials and employees all need to be disclosed.



The country&#8217;s Ministry of Justice has said it’s considering adding crypto to that list. If that happens, government staff would need to declare crypto holdings on an annual basis, according to a <a href="https://www.aac.moj.gov.tw/media/311187/%E6%B8%85%E5%BB%89%E5%9F%B7%E6%94%BF%E5%9C%8B%E9%9A%9B%E8%82%AF%E5%AE%9A-%E8%99%9B%E6%93%AC%E9%80%9A%E8%B2%A8%E8%AA%A0%E5%AF%A6%E7%94%B3%E5%A0%B1.pdf?mediaDL=true" target="_blank" rel="noreferrer noopener">statement</a> last week spotted by Forkast.



The Ministry of Justice is a government agency overseeing and managing the legal system in Taiwan.  



Its responsibilities include the administration of justice, the development of legal policies, the management of prisons and correctional facilities as well as the protection of human rights and freedoms.



The ministry does not have the authority to establish laws. It may only propose legislative changes to the Legislative Yuan, which has the power to enact these changes into law. 



Any proposed changes will need to head to debate via the unicameral legislature of Taiwan — also known as The Legislative Yuan — before a final decision can be made.



The ministry is in turn responsible for implementing and enforcing those laws, as well as providing legal advice to other branches of government and to the public.



If enacted, the move would thicken Taiwan&#8217;s crypto regulations. The government introduced anti-money laundering rules for crypto service providers in July 2021. One year later, roughly 24 crypto firms became the first to be registered under Taiwan&#8217;s Money Laundering Control Act.



The securities watchdog of Taiwan then <a href="https://blockworks.co/news/taiwan-bans-crypto-purchases-using-credit-cards" target="_blank" rel="noreferrer noopener">implicitly banned</a> crypto transactions with credit cards in 2022, after issuing a letter to the banking industry association.



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Taiwan Public Servants May Soon Need to Declare Crypto Holdings

Bessie Liu

<div id="highlights-block_62dae0c60be70" class="highlights">
 <ul>
 <li>Taiwan’s FSC said credit cards should not be used for payments tied to gambling, stocks, futures, options and other transactions</li>
 <li>Credit card issuers in Taiwan have three months to make adjustments and comply with the new law</li>
 </ul>
 
</div>



Taiwan’s securities watchdog has implicitly banned cryptocurrency transactions with credit cards on the island nation.



The country’s Financial Supervisory Commission (FSC) issued a letter to the banking industry association earlier this month, asking that they not grant “merchant status” to virtual asset providers which service credit card holders.



Details of the letter stated that digital assets are highly speculative and prices are often extremely volatile, <a href="https://money.udn.com/money/story/5613/6476972" target="_blank" rel="noreferrer noopener">local media reported</a>. Further, credit cards should not be used for payments tied to gambling, stocks, futures, options and other transactions.



The move follows strict anti-money laundering laws for cryptocurrency services providers enacted last July.



Credit card issuers in Taiwan have been given three months to make adjustments and comply with the new law. Once that time is up, an independent audit unit will review compliance and report results to the FSC, which is effectively Taiwan’s equivalent of the Securities and Exchange Commission.



Cryptocurrency is tightly regulated in neighboring China, but lawmakers worldwide have looked to <a href="https://cms.blockworks.co/congress-mulling-stablecoin-regulation-after-terra-crash/" target="_blank" rel="noreferrer noopener">hasten crypto supervision</a> following the implosion of <a href="https://cms.blockworks.co/tag/terra/" target="_blank" rel="noreferrer noopener">Terra</a>’s algorithmic stablecoin in May, which sent <a href="https://cms.blockworks.co/how-cryptoasset-markets-have-changed-since-terra-crash/" target="_blank" rel="noreferrer noopener">cryptocurrency markets tumbling</a>.



The UK recently <a href="https://cms.blockworks.co/uk-to-regulate-stablecoins-as-a-form-of-payment-via-new-bill/" target="_blank" rel="noreferrer noopener">introduced a new bill</a> that seeks to regulate stablecoins and Russia has <a href="https://cms.blockworks.co/putin-amends-law-to-broaden-russias-crypto-payments-ban/" target="_blank" rel="noreferrer noopener">extended its crypto payments ban</a> to specifically include security tokens, utility tokens and non-fungible tokens (NFTs).



Meanwhile, the Taiwanese central bank has been exploring a no-interest CBDC (central bank digital currency). The CBDC is in its second stage of development and is currently being distributed in five selected Taiwanese banks.



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