Taiwan Launches Pilot Program for Institutional Crypto Custody Services
Taiwan’s Financial Supervisory Commission (FSC) is set to introduce a pilot program for institutions interested in offering digital asset custody services. The move is part of Taiwan’s broader efforts to promote financial innovation and develop comprehensive legislation for the digital asset industry by the end of 2024.
Reports suggest that three banks have already shown interest in participating in the program, which is expected to start accepting applications in early 2025.
What is Institutional Crypto Custody?
The FSC aims to encourage financial institutions to take part in the pilot program, allowing banks to securely store digital assets such as cryptocurrencies on behalf of their clients. Hu Zehua, Director of the FSC’s Comprehensive Planning Department, outlined the process during a recent press conference, stating that the FSC will initiate a 15-day consultation period to gather public feedback.
Following the consultation period, the regulator will finalize the details of the program and announce the commencement of applications. Three private banks have already expressed interest in participating in the initiative, with plans to offer custody services to virtual asset exchanges and institutional investors.
Security is Paramount
Security remains a top priority for the FSC in overseeing virtual asset custody services. Institutions managing digital currencies are required to implement robust security measures due to the significant financial implications involved. The FSC will also enforce strict anti-money laundering (AML) protocols to prevent illicit funds from entering the system and minimize the risk of asset seizures.
Financial institutions applying for the pilot program will need to specify the types of virtual assets they intend to manage, such as Bitcoin, Ethereum, or Dogecoin, as well as identify their target clientele, which could include virtual asset platforms, professional investors, or retail clients.
Internationally, banks typically prioritize serving virtual asset exchanges before expanding to institutional investors once the security measures have been proven effective. Retail investors are generally not the initial focus of such services.
Taiwan’s decision to support virtual asset services underscores the government’s commitment to financial innovation, while maintaining a strong emphasis on safety and regulatory compliance.