Taiwan’s Financial Supervisory Commission has warned financial institutions in the country to desist from granting credit cards for cryptocurrency purchases.
“Virtual assets are highly speculative and risky, and the cash flow is complex and difficult to effectively monitor transactions,” a report by a local media, ‘United News Network’ said.
The FSC warned that with the price of virtual currency going up and down, and extremely large volatility, credit card processors must not facilitate payment for crypto platforms.
According to the FSC, credit cards are illegal payment tools for online gambling, stocks, futures, options, and other similar transactions.
The FSC, therefore, provided credit card firms with a three months grace period to ensure compliance.
It added that the audit unit must review its internal compliance and report the results to the meeting.
In the letter, the FSC warned that virtual assets “are highly speculative and risky, and the cash flow is complex and challenging to monitor transactions effectively.”
“The virtual currency has been on the decline since the beginning of this year, and there have always been concerns about money laundering.
“Therefore, the Financial Supervisory Commission sent a letter to the Association of Banks in early July. Given the highly speculative and high-risk nature of virtual assets, credit cards should not be used as payment tools for virtual asset transactions. Therefore, three requirements are given.
“Including: First, credit card acquirers are required to pay attention not to sign “virtual asset service providers”, that is, the current “virtual currency platforms and transaction business undertakings” as special stores. Second, special stores are also required not to sign “virtual asset service providers” as payees (sellers). Third, credit card acquirers should incorporate the first two items into internal control and internal audit items, and include them in the focus of the internal audit.
“The Financial Supervisory Commission also requires that if the current practices of credit card acquirers do not meet the above requirements, adjustments should be completed within 3 months. After the adjustment is completed, the audit unit must review its internal compliance and report the results to the meeting” the report read.
Taiwan’s FSC has since 2013 warned of the speculative nature of cryptocurrencies.
A year later, the FSC directed local banks not to accept Bitcoin or provide any services related to it.
The FSC has since then been regular in its criticism of virtual assets.
However, the country currently has no laws, regulations, or rulings regulating cryptocurrencies.
The country however has rules guiding the use of security tokens, even requiring firms who are interested to apply for a securities dealer license, which requires the company to have a minimum invested capital of NT$100 million and a NT$10 million operating margin.
Late last month, the Central Bank of the Republic of China (Taiwan) announced that it was considering both a retail and wholesale central bank digital currency (CBDC) having completed the trial for its retail CBDC.