Regulatory Fog Lingers for Advanced Crypto

While Taiwan’s Financial Supervisory Commission (FSC) has made progress on anti-money laundering rules and investor protections, significant regulatory gaps persist. The frameworks for staking mechanisms, tokenized derivatives, and stablecoins remain undefined. This leaves founders of Decentralized Finance (DeFi) projects and their legal advisors without clear guidance, making it difficult to build anything more complex than a standard exchange without navigating legal uncertainty.

Institutional Investors Remain Cautious

Despite positive signals like Taiwan Mobile obtaining a Virtual Asset Service Provider (VASP) license, heavyweight funds continue to hesitate. This caution stems from an incomplete regulatory playbook. Most large institutions won’t commit significant capital until a mature custody infrastructure, streamlined onboarding procedures, and concrete legal definitions are in place.

The Verdict: A Market of Two Halves

Taiwan is becoming increasingly receptive to Web3 developers who have a clean capitalization table, a robust compliance plan, and a product ready for users. The progress made by the VASP Association, along with the entry of major companies like Taiwan Mobile and FamilyMart, indicates a growing acceptance of the industry.

However, the environment isn’t yet ideal for projects centered on DeFi experiments, staking platforms, or derivatives protocols. The lack of banking guarantees introduces extra setup complexities, and ongoing legal ambiguities will inevitably slow down development for pioneers in these more advanced sectors.