The financial regulator of Taiwan has reached out to local banks to ensure that credit cards are not used for conducting any crypto transactions. According to local media, the authority considers these digital currencies as risky and monitoring the cash flows associated with them is difficult.
No credit card usage
The Financial Supervisory Commission (FSC) of Taiwan has informed banks and credit card issuers to not allow their clients to use their credit cards for making any payments that involve the use of cryptocurrencies.
The watchdog made a reference to the latest downturn in the crypto market, along with the prominent concerns about the use of crypto for money laundering, as risks that are associated with these assets. It also added that these digital assets are also highly volatile, not to mention speculative.
According to sources in the financial industry, a letter was sent to the Bankers Association of Taiwan by the FSC earlier in the month. However, it should be noted that the authority did not deny, nor did it confirm the letter initially. But, it later stated that it had indeed asked credit card companies to not associate with crypto service providers.
Only for consumption
According to the commission, people should not use credit cards for speculative trading, or financial investments and they should only be utilized as a payment tool meant for consumption. Moreover, it said that those who have acquired cards will have a period of three months for complying with the new rules.
The FSC also issued a reminder to people about a requirement that had been imposed earlier. As per this rule, credit cards cannot be used for making payments for any transactions that are linked to options, futures and stocks.
The cryptocurrency sector in Taiwan is mostly unregulated for now, even though last summer saw service providers adopt the updated rules for anti-money laundering (AML). Furthermore, the country has not finalized a project that would be focused on the development and issuance of a central bank digital currency (CBDC).
Last month, a series of technical simulations had been conducted by the Taiwanese central bank in a closed-loop environment. This was part of the ongoing trials that are being conducted for developing a prototype of the CBDC.
However, the monetary authority’s governor did admit that the bank may require an additional two years for finishing its work on the retail digital currency. This would make it twice longer than the duration that had been expected.
The Taiwanese central bank is definitely not the only monetary authority that is working on developing a central bank digital currency (CBDC). There are a number of other countries that have reached different stages in the development process, with China leading the pack. However, it should be noted that the use of the digital currency is expected to vary from country to country, as some are developing it for retail use, while others prefer to stick to wholesale and some have opted to offer both.