Taiwan’s financial regulator, the Financial Supervisory Commission (FSC), is setting the ground to ban the use of credit cards for the purchase of digital currencies within its jurisdiction.
As reported by Forkast, the regulator asked banks and credit card companies not to partner with cryptocurrency service providers as merchants. The FSC already issued a letter to the banking association earlier this month.
The FSC highlighted that the usage of credit cards should be limited to consumption, rather than become a payment method for financial instruments and speculative trading.
Apart from crypto purchases, credit cards on the island cannot even be used for online gambling, stocks, futures, options and other transactions. Though not explicitly mentioned, the regulator looks to be sealing the gate for small credit lines for the purchase of cryptocurrencies .
The FSC has provided credit card companies three months to make adjustments in their operations and comply with the new rules.
The cryptocurrency industry in Taiwan is largely unregulated. However, the island introduced anti-money laundering rules to the cryptocurrency service providers in July 2021.
A Failed Crypto Hub?
Additionally, Taiwan was seen as a crypto hub after the blanket ban on the industry by the government of mainland China. However, exiled Chinese crypto startups choose other jurisdictions in the region to establish their operations.
Meanwhile, the urgency to bring the regulations for cryptocurrencies can be seen in both developed and developing nations. While many countries like Singapore heavily regulated the industry with licensing mandates, Thailand and a few others banned crypto payments .
However, Taiwan is at the forefront of a central bank digital currency (CDBC) launch. It completed the prototype simulation of a retail CBDC last month but is yet to provide a timeline for the expected launch.
