Sat, Feb 03, 2018 - Page 12 News List

Forum looks at future of cryptocurrency regulation

VULNERABILITIES:Researchers said that cryptocurrency markets remain highly susceptible to manipulation, while trading is mainly driven by technical indicators

By Ted Chen  /  Staff reporter

The Taiwan Academy of Banking and Finance yesterday explored the future of cryptocurrency regulation at a forum in Taipei, as the asset class continues to make headlines amid concerns.

In light of last month’s cyberheist at Coincheck Inc, an online cryptocurrency exchange based in Japan, the blueprint for a regulatory system for the virtual asset must ensure information security and protection for consumers, Financial Supervisory Commission Vice Chairman Cheng Cheng-mount (鄭貞茂) said.

While the government aims to provide an environment that fosters innovation, regulators must also consider issues such as crime and money laundering prevention and revenue collection, he said.

“The commission requires the same level of transparency and control for cryptocurrencies as the rest of the financial sector,” Cheng said.

He expressed optimism that cryptocurrencies and the blockchain technology that powers them could gain scale and complement the existing financial system and bring cost reductions and improve inclusivity.

However, it remains unclear which government departments would oversee the regulation of cryptocurrencies, Cheng said, adding that officials in Taipei are still monitoring developments abroad.

He suggested that the Ministry of Economic Affairs take on the task, as cryptocurrencies are virtual commodities, but are not classified as currencies or financial instruments, which would fall under the jurisdiction of the central bank or the commission.

Academy researchers said that cryptocurrency markets remain highly susceptible to market manipulation, as traders with large holdings can easily sway investor sentiment by spreading unfavorable news and rumors.

The lack of fundamental metrics also means that trading decisions in cryptocurrencies are mainly driven by technical indicators, the academy said.

In this regard, regulators could work toward identifying bad actors, require exchanges to be more transparent about pricing and implement a Tobin tax to contain speculation, it added.

The rise of cryptocurrencies could usher in new markets and industries, expanding the options of the nation’s efforts toward industrial upgrade and transformation, National Development Council Deputy Minister Chiou Jiunn-rong (邱俊榮) said.

Alex Liu (劉世偉), chief operating officer of MaiCoin, an online cryptocurrency platform, urged the government to define its regulatory system, saying that the nation could become a hub to capitalize opportunities forgone by other nations that have shunned the asset class.

Many companies, including MaiCoin, are willing to meet compliance when it is defined, he said.

Under the current rules, MaiCoin is flagged as high-risk by banks, Liu said, adding that stringent capital requirements imposed on the company have resulted in less-than-ideal spreads in its business of purchasing cryptocurrencies on behalf of clients using fiat money.

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