Although an official CBDC pilot or issuance date remains unconfirmed, there are indications of a possible trial run later this year.
Taiwan is making a significant step towards a central bank digital currency (CBDC) by planning to test a prototype within the government’s upcoming digital voucher system. On July 10, 2024, central bank governor Chin-Long Yang announced this development, which could potentially transform the island nation’s financial landscape.
Digital Voucher System for CBDC
While the CBDC prototype itself won’t utilize blockchain or smart contracts, it will improve the infrastructure of the digital voucher program currently under development by the Ministry of Digital Affairs. This collaboration signifies a strategic approach, potentially using the voucher system as a springboard for broader CBDC implementation.
Governor Yang highlighted the future potential for various government agencies to distribute digital vouchers through this platform. The Ministry of Digital Affairs would oversee voucher distribution, while the central bank would manage the financial transactions once users spend the vouchers. This separation of roles ensures a clear division of responsibilities within the digital ecosystem.
Although an official CBDC pilot or issuance date remains unconfirmed, there are indications of a possible trial run later this year. According to a central bank official responding to a lawmaker’s inquiry, testing for the CBDC prototype within the digital voucher system could begin as early as December 2024 or the first quarter of 2025.
The digital voucher system itself might commence testing in August and be operational by October 2024, according to United Daily News. This timeline, if accurate, positions the voucher program as a potential “warm-up” for the CBDC pilot, paving the way for a similar rollout strategy for the digital currency.
Taiwan’s Crypto Regulation & CBDC Development
CBDC prototype aligns with recent developments in Taiwan’s cryptocurrency regulations. Jin-Lung Peng, chair of the Financial Supervisory Commission (FSC), plans to propose a special law for crypto assets to the Executive Yuan in June 2025. This law aims to create a comprehensive regulatory framework for Taiwan’s largely unregulated crypto market.
Currently, the FSC mandates that crypto service providers comply with anti-money laundering (AML) laws, but a dedicated legal framework would offer greater clarity and oversight. Recently, the local crypto sector formed an industry association to develop self-regulatory guidelines under government guidance.
Additionally, the Ministry of Justice proposed amendments to AML laws in May 2024, requiring registration for both domestic and foreign crypto firms operating in Taiwan. These efforts showcase a multi-pronged strategy to regulate the crypto space while encouraging innovation.
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