Taiwan is taking steps to establish a comprehensive framework for crypto firms, according to a recent report from The Block. A draft special law proposed recently by Legislative Yuan member Yung-Chang Chiang could bring clarity and oversight to this burgeoning industry by November. 

One of the key arguments behind Chiang's proposed law is the recognition that cryptocurrencies are fundamentally different from traditional financial products. Their digital and decentralized nature presents challenges that demand a dedicated regulatory approach.

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Preventing Regulatory Arbitrage

The specter of regulatory arbitrage, where crypto firms seek refuge in offshore havens to evade oversight, looms large. Chiang's proposal is a proactive response to this concern, ensuring that all crypto platforms operating within Taiwan adhere to a uniform set of regulations. This move can reportedly foster fair competition and bolster investor protection.

Last week, Taiwan's Financial Supervisory Commission released guidelines for the crypto sector to self-regulate, but such a scheme often lacks the force for effective enforcement. Chiang's special law empowers regulators to impose administrative penalties on operators who violate self-regulation rules.