Taiwan Bitcoin practitioners want to have a good talk with regulators

"Bitcoin is not a legal payment tool in Taiwan." This statement by Financial Supervisory Commission Chairman Tseng Ming-tsung stunned Bitcoin practitioners who had just heard a month ago that the government had passed a financial technology innovation plan and would invest NT$1 billion in a financial technology fund.

Bitcoin is a two-way virtual currency. It was first proposed in 2008 by an anonymous person with the pseudonym "Satoshi Nakamoto": a decentralized, pure P2P electronic currency. Bitcoin has no issuing unit. New Bitcoins can only be "mined" through computer calculations called "mining". However, as long as ordinary people hold a Bitcoin electronic wallet, they can buy Bitcoin through Bitcoin exchanges. The decentralized nature of Bitcoin requires that every transaction change must be approved by all "nodes", so it is transparent and open, and it is difficult to tamper with transaction data.

Bitcoin is currently used as a payment currency and an investment commodity internationally. Due to its dual characteristics of "currency" and "commodity", it is regulated differently in different countries. For example, in September this year, Bitcoin was classified as a commodity similar to gold and oil by the Commodity Futures Trading Commission in the United States; at the end of October, the European Union ruled that Bitcoin transactions in Europe are treated as general currency and are exempt from VAT. However, in Taiwan, the government currently has no laws to regulate Bitcoin. The central bank stated in a press release two years ago that Bitcoin is not a currency, but a highly speculative digital "virtual commodity."

Due to the lack of regulations, Taiwanese businesses have a more rigorous attitude

Even so, in the past year, a group of new Bitcoin entrepreneurs in Taiwan have been quietly cultivating the development of this virtual currency, making Taiwan the economy with the highest number of merchants per capita accepting Bitcoin in Northeast Asia this year. For example, BitoEx, which cooperates with FamilyMart convenience stores to provide small-amount Bitcoin purchase services, and Maicoin, which provides Bitcoin services in Taiwan and the United States.

BitoEx CEO Zheng Guangtai said that due to the lack of relevant regulations, Taiwanese businesses have adopted more rigorous methods of regulation, such as registering an account and using ID cards, mobile phones, emails, etc. to authenticate before purchasing larger amounts of Bitcoin through bank transfers. Although purchasing through FamilyMart does not require identity authentication, the maximum amount of collection and payment is limited to NT$20,000, which makes it less likely for fraud to occur. When fraud occurs, BitoEX is also able to warn and intercept it.

Zheng Guangtai said that when the news that users can buy small amounts of Bitcoin at FamilyMart was exposed, the international Bitcoin community believed that Taiwan's development was very advanced, and some people even organized groups to visit Taiwan just to experience buying Bitcoin at FamilyMart. Bitcoin's visibility in Taiwan has increased this year, and BitoEx's turnover has also increased. There are two types of buyers. One is young people who want to buy foreign game points but do not have credit cards to pay. They can buy small amounts of Bitcoin at FamilyMart and then use Bitcoin to buy points; the other is investors.

Zheng Guangtai believes that the controversy caused by the kidnapping case requiring payment in Bitcoin may be an opportunity for Taiwan's Bitcoin industry to "clear the name of Bitcoin." "In the past, Bitcoin was easily misunderstood by the public because of its high anonymity and the fact that it is a universal currency."

Blockchain technology brings trust

Due to the anonymity of Bitcoin, it has often been linked to criminal activities in the past. For example, various illegal transactions in the "dark net" are often paid for with Bitcoin. However, the greatest value that Bitcoin brings to the world may not be the currency or the commodity itself, but the underlying "blockchain" technology.

Through blockchain technology, data can also be decentralized. Data and data, objects and objects can be changed or exchanged between points without the need for a neutral third party. The cover story of the Economist magazine published on October 31st believes that blockchain technology is a "machine for building trust". It can be applied in a wide range of areas, such as authentication data of artworks, bank accounts, etc. The governments of Greece and Honduras are even planning to use blockchain technology to establish public data such as land registration.

For banks, using blockchain technology to record changes in account information is far more convenient than retaining internal bookkeeping information. Spain's Santander Bank believes that payment technology can save banks more than $20 billion by 2022. 25 banks have joined a blockchain technology startup called R3CEV to develop universal standards, and the Nasdaq Stock Exchange has begun to use blockchain technology to record private company transaction records.

Maicoin is the first Bitcoin trading platform in Taiwan, and also provides Bitcoin e-wallet services. In addition, the US branch uses blockchain technology to develop "BlockSeer", which can be used to track problematic Bitcoin transactions and has been adopted by US prosecutors. Maicoin CEO Liu Shiwei said that, for example, the kidnapping case can actually be tracked through BlockSeer technology. BitoEx has also become a blockchain project laboratory to study blockchain-based financial and enterprise-level applications.

I hope the industry and the government can have a good discussion.

“The central bank’s attitude has actually not changed,” said Maicoin CEO Liu Shiwei, “but the Financial Supervisory Commission didn’t understand it before, so it didn’t care.”

Liu Shiwei said that the amount of money invested in blockchain technology development has reached 1 billion US dollars, but Taiwan has not made any move. He compared blockchain technology to Taiwan, just like the Internet is to North Korea today, and it is impossible to bury your head and not do it. "Without Taiwan, Bitcoin will continue to develop." If Taiwan does not encourage the development of Bitcoin and blockchain technology, these teams can just go elsewhere and look for better opportunities.

In fact, the Financial Supervisory Commission defined blockchain technology as one of the projects included in the financial technology innovation plan passed in early October. However, Liu Shiwei believes that if Bitcoin is considered illegal by the government and is investigated, it will not be able to develop in Taiwan, and the underlying blockchain technology will be even less likely to be popularized. In the future, if the special law for electronic payment institutions is developed, a certain amount of capital will be required to establish a Bitcoin trading institution, which will be very difficult for Bitcoin startups.

"Bitcoin and blockchain technology convey value, not just currency." Liu Shiwei said bluntly that through this turmoil, we can see the choice of society, and he hopes that the industry still has the opportunity to have a good discussion with the government.