Taiwan’s Financial Supervisory Commission (FSC) will launch a pilot program for institutions interested in digital asset custody services, local media reported on Oct. 8.
The program is part of the country’s broader effort to foster financial innovation amid plans to introduce comprehensive legislation for the digital asset industry by the end of 2024.
According to reports, 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 safeguard digital assets like cryptocurrencies for clients.
Hu Zehua, Director of the FSC’s Comprehensive Planning Department, outlined the process during 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 expressed interest in the initiative. They aim to offer custody services for virtual asset exchanges and institutional investors.
Hu noted that while some securities firms 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 in overseeing virtual asset custody. According to Hu, institutions handling digital currencies must ensure robust safeguards due to the large potential sums involved.
The FSC will also enforce strong anti-money laundering (AML) protocols to prevent illegal funds from entering the system and reduce the risk of asset seizures.
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 outline their target clientele, which could include virtual asset platforms, professional investors, or retail clients.
Internationally, banks tend to 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 the start.
Taiwan’s move to support virtual asset services reflects the government’s commitment to financial innovation while ensuring that safety and regulatory standards remain at the forefront.