Credit card crypto purchases to be banned in Taiwan: Report
Credit card cryptocurrency transactions will no longer be allowed in Taiwan, as the island nation’s watchdog deems digital currencies to be risky and speculative assets, local reports reveal.
In a letter sent to the banking industry association earlier this month, Taiwan’s Financial Supervisory Commission urged them not to extend “buyer status” to digital asset providers that support credit card holders.
According to reports, credit card processors need to be vigilant and should not use virtual assets. The reports noted that credit card companies believe that cards are only consumer payment instruments and not investment and wealth management devices with high speculative financial leverage.
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Fast tracking of crypto regulation worldwide
Credit card issuers that now support crypto merchants have three months to comply with the FSC’s requirements, according to the reports. After the expiry of the deadline, the tenderers must deliver a compliance audit report to the agency.
Regulators around the world have accelerated digital currency legislation in recent months as global financial markets have taken a significant hit this year, with some prominent firms liquidating and billions of money leaving the industry.
Last year, after China began cracking the whip on cryptocurrencies, Taiwan experienced a flurry of activity and was tipped to become the region’s new bitcoin powerhouse. However, since then, not much has been heard about the local crypto sector.
The FSC made it clear:
“Given the extremely speculative and high-risk nature of virtual assets, credit cards should not be used for transactions involving virtual assets.”
The FSC has also banned the use of credit cards for online gambling, shares, futures, options and other comparable transactions.
Taiwan revised its Anti-Money Laundering (AML) standards for cryptocurrency exchanges in July 2021, at the suggestion of the Financial Action Task Force.
Following the collapse of Terra’s algorithmic stablecoin in May, which sent shockwaves through the broader crypto markets, governments around the world have sought to speed up crypto oversight.
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BTC total market cap at $425 billion on the daily chart | Source: TradingView.com
Taiwan’s CBDC and young crypto investors
More than 50 percent of Taiwanese crypto investors were under the age of 24 as of last year. About 10% of investors were over 35 years of age.
The skewed age distribution is a result of the digital currency environment’s reliance on internet culture, which advocates the use of digital coins and NFTs as an economically attractive investment instrument.
Meanwhile, Taiwan is on the verge of creating a central bank-issued digital currency despite its strict stance against crypto-assets.
The country’s central bank announced last month that it had been working on CBDC for the past two years, with detailed trials for the pilot test already completed.
The central bank was expected to complete its technical testing of the CBDC prototype by September, according to Atlantic Council Research.
Featured image from GeoGuessr, chart from TradingView.com