Taiwan Wants to Become an Island of Blockchain
Blockchain & Crypto Asia #2 Taiwan's election and its blockchain/Thai blockchain startup Lightnet closed Series A/Hong Kong SFC to issue #7 license to crypto asset trading operators
Taiwan’s election result is no surprise. Tsai Ing-wen has been re-elected as the President of Taiwan. We wish Taiwan and its people the best.
Let’s talk about Taiwan’s blockchain in this newsletter and try to give you a general picture of Taiwan’s blockchain landscape in these minutes of read.
Taiwan, together with Singapore, Hong Kong, and South Korea, was once crowned one of the 4 Asia’s Little Dragons. The four little dragons rose to prosperity between the 1960s-1990s. They followed Japan’s export-led growth model and engaged in labor-intensive manufacturing activities. However, with an aging population and slowing economy, the little dragons lost their stature at the turn of the 21st century.
With an effort to find a new growth engine, Singapore, South Korea, and Hong Kong readily embrace the opportunities that blockchain technology and crypto/digital assets present. Taiwan has a catch-up to do compared to its peers. It is falling behind in investment and adoption of blockchain technologies when compared with the other three little dragons.
We believe that Taiwan is looking for ways to make a dent and compete with its peers, as well as with Mainland China.
Taiwan’s central bank’s governor Yang Chin-long is an advocate of DLT and the central bank is open to exploring blockchain technology.
Unlike Mainland China, which issued strict regulation to completely ban ICOs and cryptocurrecy trading in 2017, Taiwan’s Financial Supervisory Commission views virtual currencies such as bitcoin as “highly speculative virtual commodities.” According to the statement, whether tokens involved in initial coin offerings (ICOs) are securities under the Securities and Exchange Act will be examined case by case and illegal fundraising will be sanctioned in accordance with financial laws. Speculating that Taiwan’s regulators are less hostile towards cryptocurrencies, companies from Mainland China are flowing into Taiwan to launch various operations.
The Legislative Yuan, Taiwan’s unicameral parliament, formed a group “the new Taiwan Parliamentary Coalition for Blockchain” (TPCB) in 2018 with the purpose of aligning politicians of different parties in Taiwan to create and agree upon a clear, “friendly” and robust regulatory framework for blockchain technology and cryptocurrencies. The Taiwanese government has the vision to turn Taiwan into Blockchain Island.
Taiwan is behind the largest bitcoin mining rig supplier in the world, Bitmain Technologies. Bitmain uses Taiwan Semiconductor Manufacturing Company Ltd. to manufacture its ASIC chips that power mining machines which are believed to control more than 50% of the bitcoin mining.
In 2019, 15 Taiwanese universities formed the Taiwan Blockchain Academia, an alliance to enhance the research and distribution of knowledge of blockchain and cultivate talent to support the industry.
Asia Blockchain Summit July 15-16, Taipei, 2020. It will be the 3rd summit, expecting 4000+ audience and featuring 140+ speakers.
[Investment] Bangkok-headquartered blockchain startup Lightnet closed Series A round of $31.2M to facilitate cross-border payments in Southeast Asia. Lightnet aims to provide an instant and frictionless cross-border payment and settlement system to the unbanked and underbanked in the region, replacing SWIFT.
This round’s investors include UOB (Singaporean United Overseas Bank) Venture Management, Seven Bank, Uni-President Asset Holdings, HashKey Capital, Hopeshine Ventures, Signum Capital, Du Capital and South Korea’s Hanwha Investment and Securities. Lightnet is based on the Stellar protocol.
Update: Lightnet Group signed an MoU with the Swiss bank SEBA Bank and Lightnet is using Velo Prototocal created by Velo Labs.
[Regulation] Hong Kong securities watchdog Securities and Futures Commission (SFC) is expected to issue no more than 5 licenses of Category #7 to Hong Kong-based crypto asset trading operators in the near future.
Applicants for the license are monitored in the Sandbox before being deemed qualified for the #7 License. Some of the requirements for the license include offering products to institutions only and no futures products are allowed. SFC announced its regulatory framework for virtual asset portfolio managers, fund distributors, and trading platform operators in November 2018.
BC Group’s OSL publicly announced its application for the license. In addition, Huobi and HashKey Group may be applicants.
Update: On August 21, 2020, Hong Kong Securities and Futures Commission issued Type 1 (dealing in securies) and Type 7 (ATS) licenses to OSL and approved in princle OSL as a virtual assets operator in Hong Kong, which includes both cryptocurrency and STO.
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About the author
In the innovative blockchain, crypto & digital asset ecosystem, Asia is the other side of the coin. Blockchain & Crypto Asia, which covers exclusively blockchain and crypto & digital asset developments in Asia, including regulation, investments, and company highlights, helps you stay on top of what is going on in the Far East. The curated content is selective and serves as information, and personal views only, not investment advice.
I am the co-founder of Kee Global Advisors. Please email me with any ideas or thoughts. I’d love to hear from you! You can also follow me on Linkedin and Twitter.