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April, 2018

Taiwan signals interest in blockchain opportunities

Original article: Official website of Taiwan's Central Bank

During his recent inauguration, Taiwan's new Central Bank governor Yang Chin-long said that the Central Bank would keep an open mind about financial technology, including blockchain. Yang said that fintech has not yet had a major impact on Taiwan's financial system, but could in the future change Taiwan's monetary policy and the payment industry. The central bank may use blockchain to boost the security and efficiency of Taiwan's electronic payment system, he added. 

Analysis:

Taiwan's financial regulators have a reputation for caution. It's rare that they readily embrace emerging technology. They have yet to map out a coherent policy framework for virtual currency, although they have vowed to use a less heavy-handed approach than the Chinese mainland or South Korea. 


In March, Central Bank chief Yang reportedly told Chinese Nationalist Party Legislator Jason Hsu that he is waiting for Taiwan's Financial Supervisory Commission (FSC) to complete research on blockchain's applications for Taiwanese industry. 


In an interview with The News Lens, Hsu said that he had drawn up a regulatory roadmap with key players in the local blockchain and cryptocurrency community and then presented that roadmap to the government. The guidelines recommend that virtual currency be defined as a virtual asset, such as airline miles, and that a government body be set up to manage initial coin offering (ICO) applications, similar to what now exists in France. Additionally, the guidelines suggest ICO investors receive tax credits just as angel investors do in Taiwan.  


For blockchain investors, Taiwan's engineering talent and affordability are attractive. Neither talent nor office space is anywhere near as expensive as in Hong Kong or Singapore. Compared to Japan, which is far ahead in the cryptocurrency and blockchain space, Taiwan is more open to foreign investment. 


Sean King, who heads the Singapore-based virtual-currency exchange GTS, suggested during a recent visit to Taipei that digital currency futures could be changed in Taiwan. According to The News Lens, King met with the Taiwan Futures Exchange, which expressed "enthusiasm" for the idea. With a clear regulatory landscape, Taiwan could possibly entice GTS to relocate from Singapore, he said. 


There are many practical applications for blockchain in Taiwan. As in the Chinese mainland, food safety is a top concern for consumers. Blockchain could be used to ensure the integrity of Taiwanese food supply chains that are frequently compromised. In May 2016, Taiwan's Yuyang International was found to be selling expired frozen seafood to 170 hotel customers, including shrimp purchased in 2005 and mackerel purchased in 2007. Frozen seafood normally has a shelf life of two years. In total, authorities seized more than 23,000 kilograms of expired products. In July 2016, Taiwanese authorities discovered that the Kaohsiung-based Bai Xian Wu Enterprise Co. had sold seven tons of expired food to restaurants in central and southern Taiwan including frozen mollusks that had expired in July 2012. 


As IBM notes on its blockchain blog, "If farm origination details, batch numbers, processing data, expiration dates and shipping details can be digitally recorded on blockchain, it may become possible to verify the history, location and status of a food product. This end-to-end traceability would improve transparency and efficiency throughout the food supply chain."

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