Central Bank: Stablecoins to be Included in Foreign Exchange Management, Plans to Establish Data Reporting Mechanism for Transfers

Taipei, June 24 (CNA) The rapid development of stablecoins presents new challenges for cross-border capital flows and foreign exchange management. The Central Bank stated that it will establish a foreign exchange management mechanism for stablecoins under the authorization framework of the Virtual Asset Service Act, with related measures including incorporating stablecoin transactions into the existing foreign exchange management framework and establishing a data reporting mechanism for transfers.

The rapid development of stablecoins in the global financial market not only poses challenges to traditional currencies but also presents a significant test for financial regulators. In reference materials after its board meeting, the Central Bank clearly pointed out that the application of stablecoins may cause some cross-border capital flows to gradually deviate from the existing foreign exchange control framework. This not only increases the difficulty for regulators to grasp cross-border capital flows but may also weaken the effectiveness of capital movement and foreign exchange management measures. Therefore, countries are gradually incorporating stablecoins into important policy issues for macroprudential supervision and foreign exchange management.

The Central Bank stated that in response to the challenges posed by stablecoins, major international financial organizations have successively proposed supervisory principles and policy recommendations. Among them, the International Monetary Fund (IMF) and the Financial Stability Board (FSB) pointed out that supervisory authorities should identify and properly respond to the impact of stablecoins and other virtual assets on the macroeconomy and financial stability, including requiring virtual asset service providers to report relevant data to narrow the information gap, and enhance supervisory effectiveness through international cooperation and information exchange mechanisms.

Therefore, the Central Bank clearly outlined its supervisory stance on stablecoins and three major response measures in its report, stating that under the international regulatory trend, in order to maintain the consistency and effectiveness of the foreign exchange management system, the Central Bank will establish a foreign exchange management mechanism for stablecoins under the authorization framework of the "Virtual Asset Service Act," following the principle of "same activity, same risk, same regulation," to maintain the order and stability of the foreign exchange market.

The Central Bank is also adopting three major measures: establishing a data reporting mechanism for stablecoin transfers, incorporating stablecoin transactions into the existing foreign exchange management framework, and continuously monitoring the development of the stablecoin market to prudently respond to related risks.

The Central Bank explained that it will plan to establish a data reporting system for stablecoin transfer services provided by domestic virtual asset service providers to strengthen the grasp of on-chain fund flows, cross-border transfers, and transaction volumes, and to enhance cross-border capital movement supervision capabilities.

In addition, stablecoin transactions will be incorporated into the existing foreign exchange management framework to ensure that the same supervisory standards apply across different financial channels, prevent regulatory arbitrage opportunities arising from changes in business models, and maintain the consistency and integrity of the foreign exchange management system.

The Central Bank also emphasized that it will continue to monitor the development of the stablecoin market, including transaction volumes, price deviations, cross-border capital flows, and virtual asset service business models. Through a comprehensive data reporting system, on-chain supervisory technology, and foreign exchange management regulations, it will continue to strengthen supervisory capabilities, maintain the order of the foreign exchange market, and exchange rate stability. (Editor: Lin Shu-yuan) 06/24/115

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