Explanation for claims that the government has failed to protect the rights and interests of users of offshore virtual asset exchanges in Taiwan

    With regard to claims that the Financial Services Agency of Japan has implemented supervision over domestic and overseas virtual (crypto) asset exchanges and that the government of Taiwan has failed to protect the rights and interests of users of offshore virtual asset exchanges in Taiwan, the Financial Supervisory Commission (FSC) issues the following clarification:
1. FTX Digital Markets Ltd. (FTX) is located offshore and is not an institution established with the approval of the FSC. All related products were provided overseas and investors are required to assess risks at their sole discretion. FTX set up a subsidiary in Japan but not in Taiwan. The supervision measures implemented by Japan and Singapore do not apply to offshore exchanges.
2. Response measures taken by Japan and Singapore for the FTX incident
(1) The Financial Services Agency of Japan has issued an administrative decision for suspending operations to the crypto asset exchange FTX Japan (FTX's subsidiary in Japan) and has taken measures to protect the rights and interests of the customers of FTX Japan. The measures do not apply to offshore FTX exchanges.
(2) The Monetary Authority of Singapore (MAS) also issued a press release on November 21, 2022 to clarify that FTX is not licensed by MAS and operates offshore. MAS is unable to protect the rights and interests of users in Singapore who conduct transactions on the FTX exchange. Even if a virtual asset exchange is licensed in Singapore, it would be currently only regulated to address money-laundering risks, not to protect investors.
3. The FSC has repeatedly reminded the public to pay attention to the risks of virtual asset transactions. The FSC will continue to pay attention to subsequent development and learn about the views and responses of other regulators to this incident.
(1) The FSC has issued several press releases to remind the people that due to the lack of transparency in virtual asset market information, price fluctuations, and high investment risks, the public is advised to exercise caution, review the authenticity of related information, and carefully evaluate investment risks before engaging in domestic or offshore transactions on virtual asset transaction platforms or in private transactions.
(2) "Security token offerings" (STO) are securities defined in the Securities and Exchange Act and must be governed by related regulations in the Securities and Exchange Act. Other virtual assets or derivatives therefrom (e.g., warrants and deposit transactions) are not financial products authorized for issuance by the FSC. The transaction platform involved in this incident is located offshore and is not an institution established with the approval of the FSC. All related products were provided overseas and the protection mechanisms of the Securities and Futures Investors Protection Center or Financial Ombudsman Institution do not apply.

Contact unit: Legal Affairs Division, Banking Bureau
Telephone: (02) 8968-9625
If you have any questions, please send an email to the FSC's public opinion mailbox
(https://fscmail.fsc.gov.tw)