Taiwan Set to Ban Purchase of Crypto With Credit Cards

Taiwan’s financial regulator has issued new requirements for banks and credit card companies preventing them from allowing credit cards as a means of payment for virtual asset services.

Earlier this month, Taiwan’s Financial Supervisory Commission issued a letter to the country’s banking industry association, precluding credit card agencies from signing on virtual assets service providers as merchants.

“In view of the highly speculative and high-risk nature of virtual assets, credit cards should not be used as payment tools for virtual asset transactions,” the statement read. 

The authority explained that credit cards should serve as a payment tool for consumption rather than a source of funding for financial investment and speculative trading.

While this is certainly the case for what it describes as “highly speculative, high risk and highly financially leveraged transactions” of cryptocurrencies, the FSC has also prohibited the use of credit cards as payment tools for online gambling, stocks, futures, options and other similar transactions.

Companies have three months to make adjustments to comply with the new requirements.

Taiwan confirms CBDC

Meanwhile, Taiwan recently confirmed its intention to launch a central bank digital currency (CBDC). Plans for a pilot are expected soon, following the completion of trials for its prototype retail CBDC in technical simulations last month.

While a CBDC is under development, Central bank governor Yang Chin-long said that an exact timeline for its public rollout is still unclear. Yang believes that the banking regulator has to overcome a few hurdles before a wider launch for payments. 

The Bank of Taiwan has been researching the use cases of both a retail and wholesale CBDC for around two years. According to Atlantic Council Research, the central bank was aiming to conclude the technical testing of its CBDC prototype by Sept.

While the country looks at the future potential of digital payments, the BoT already concluded its feasibility study back in June 2020, according to the report.