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 broader efforts to promote financial innovation, amid plans to introduce comprehensive legislation for the digital assets industry by the end of 2024.
According to reports, three banks have already expressed interest in participating in the program, which will begin accepting applications in early 2025.
Institutional custody of cryptocurrencies
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, outlined the process at a press conference, stating that the FSC will open a 15-day consultation period to gather public input.
After reviewing the feedback, the regulator will finalize details and announce when applications for the pilot program can begin.
So far, three private banks have shown interest in the initiative. They aim to provide custody services for virtual asset exchanges and institutional investors.
Hu noted that while some securities companies also showed interest, their smaller capital reserves raise security concerns. As a result, banks from the same financial groups are more likely to apply.
Security is a top priority
Security will remain a top priority for the FSC when overseeing the custody of virtual assets. According to Hu, institutions handling digital currencies must ensure robust safeguards due to the large potential amounts involved.
The FSC will also enforce strict anti-money laundering (AML) protocols to prevent illicit funds from entering the system and reduce the risk of asset seizure.
Financial institutions interested in the pilot will have to specify which virtual assets they will manage, such as Bitcoin, Ethereum or Dogecoin. They will also need to outline their target audience, which may include virtual asset platforms, professional investors or retail clients.
Internationally, banks typically focus on serving virtual asset exchanges first, later expanding to institutional investors once security measures prove reliable. Hu noted that retail investors rarely receive such services at first.
Taiwan’s move to support virtual asset services reflects the government’s commitment to financial innovation while ensuring security and regulatory standards remain paramount.