Providers of automated teller machines (ATMs) that allow people to purchase cryptocurrencies with cash have to comply with anti-money laundering (AML) regulations and conduct know-your-customer (KYC) practices, or face a penalty, the Financial Supervisory Commission (FSC) said yesterday.
The FSC made the remarks following a nearly month-long investigation after Chinese Nationalist Party (KMT) Legislator Lai Shyh-bao (賴士葆) on Dec. 23 raised questions about the machines’ operations during a meeting of the legislature’s Finance Committee.
The commission found that there are at least 24 bitcoin ATMs in Taiwan, which are operated by different companies for different purposes, Banking Bureau Chief Secretary Phil Tong (童政彰) said.
One of the operators was among the 16 virtual-asset service providers that have reported to the commission about their compliance with AML regulations and practices, while the others are not regulated, he said.
“Some providers of those ATMs use the machines not as a tool to boost trade, but for marketing campaigns. They assign employees to tell people how to open an account at the companies’ digital platform to trade virtual coins online,” Tong said.
“However, we found that some ATMs allow consumers to trade cryptocurrencies without [the company] following KYC practices. Such providers might have contravened AML regulations,” he said.
The commission will ask the providers to work on AML compliance and failing that, they might be fined NT$500,000 (US$18,092) or more, he said.
In related news, the commission yesterday tweaked its regulations on security token offerings (STOs), but did not raise the fundraising limit of NT$30 million, despite calls from interested parties.
Companies wishing to raise more funds would still have to apply to run an experiment in the regulatory sandbox, the commission said.
“Companies that aim to raise more than NT$30 million are not small and they can raise funds via regular channels, such as an initial public offering,” Securities and Futures Bureau Deputy Director-General Kuo Chia-chun (郭佳君) said by telephone.
“As STO is a new fundraising mechanism and bears more risks, it is appropriate that STOs apply only to small companies,” Kuo said.
No company has filed for an STO since the regulations took effect in January 2020, data from the commission showed.
The commission has no plans to regulate non-fungible tokens (NFT) for the time being, as it does not consider the tokens securities, even though they have gained popularity in Taiwan lately.
“Although people can raise funds by launching NFTs, as they can by issuing bonds or shares, and tokens can be traded like bonds or shares, they are still different from the two main types of securities,” Kuo said.
NFTs are not issued to fund an operational project or business, but are issued as a digital certification of works of art, so the commission considers it more like a real product than securities, she said.
The commission would investigate any suspicious fundraising activity if investors file a report about being scammed, she added.
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