Taiwan’s Financial Supervisory Commission (FSC) will launch a pilot program for institutions interested in digital asset custody services, local media reported on October 8.
The program is part of the country’s wider efforts to drive financial innovation as part of plans to introduce comprehensive legislation for the digital assets sector by the end of 2024.
Reportedly, three banks have already expressed interest in joining the program, which will begin accepting applications in early 2025.
Institutional crypto custody
The FSC will encourage financial institutions to participate in the pilot program, which will allow banks to protect digital assets such as cryptocurrencies for customers.
Hu Zehua, director of the FSC’s comprehensive planning department, described the process at a press conference, saying the FSC would open a 15-day consultation period to gather public comments.
After considering the feedback, the regulator will finalize details and announce when applications for the pilot program can begin.
So far, three private banks have expressed interest in the initiative. They aim to offer custody services to virtual asset exchanges and institutional investors.
Hu noted that while some securities firms have also expressed interest, their smaller capital reserves raise security concerns. As a result, banks from the same financial groups are more likely to apply.
Safety is a top priority
Security will remain a top priority for the FSC in overseeing the custody of virtual assets. According to Hu, institutions managing digital currencies must ensure strong collateral due to the potentially large sums involved.
The FSC will also enforce strict anti-money laundering (AML) protocols to prevent illegal funds from entering the system and reduce the risk of asset seizure.
Financial institutions interested in the pilot will need to specify which virtual assets they will manage, such as Bitcoin, Ethereum or Dogecoin. They will also need to define their target customers, which could include virtual asset platforms, professional investors or individual clients.
Internationally, banks tend to focus on virtual asset trading first, then expand to institutional investors once security measures prove reliable. Hu noted that retail investors rarely benefit from such services at first.
Taiwan’s decision to support virtual asset services reflects the government’s commitment to financial innovation while ensuring that security and regulatory standards remain at the forefront.
