Cryptocurrency investments have gained popularity, with some companies assisting clients in navigating the space, including cryptocurrency banks offering digital assets as financial products.

This popularity can be determined by the daily trading volume exceeding $100 million in one of Taiwan’s biggest exchanges, MaiCoin. Quantrend Technology, a Taiwanese quantitative trading firm, has achieved an annual trading volume surpassing NT$9 trillion (approximately US$300 billion), ranking it among the top ten global cryptocurrency market makers.

With cryptocurrency becoming more mainstream, it raises concerns among regulators due to the nature of crypto having a “wild west” nature where exploits and scams emerge at a rapid rate. 

Unethical companies exploit cryptocurrency through methods like ICO fundraising, arbitrage schemes, and fraudulent "mining profit" schemes targeting average consumers.

Government Response

Under Article 29 of the Banking Act, non-bank entities are prohibited from "accepting deposits" and performing activities typically reserved for banks. Violators can face penalties of up to 10 years in prison under Article 125 if they attract public capital by promising returns above the principal amount.

Taiwan courts initially ruled that digital assets like Bitcoin did not qualify as "deposits or capital" under the Banking Act. However, recent Supreme Court decisions reflect a shift in interpretation, viewing virtual assets as financial tools with market impact and accumulation potential similar to traditional currency, suggesting they may be subject to similar regulatory standards.

Some of the Taiwanese regulatory bodies overseeing cryptocurrency in Taiwan includes:

1. The Financial Supervisory Commission (FSC)

Taiwan's main financial regulator, responsible for enforcing anti-money laundering (AML) compliance among crypto firms and guiding self-regulation through the new Virtual Asset Service Provider (VASP) Association.

2. The Taiwan Virtual Asset Service Provider Association (VASP)

Recently established under FSC guidance, this association includes 24 crypto firms working to set industry standards and classifications that align with government goals for a secure and regulated crypto space.

3. The Ministry of Justice (MOJ)

Supports AML efforts in the crypto sector by working with the FSC to enforce compliance for local and foreign firms. Recent MOJ proposals aim to introduce stricter AML requirements and penalties for non-compliance.

4. The Central Bank of Taiwan

Although not a direct regulator of crypto, the Central Bank is developing a central bank digital currency (CBDC) and exploring tokenization, which may impact Taiwan’s digital currency ecosystem.

Stablecoin Initiatives

Taiwan’s Central Bank is advancing its digital currency work, recently completing a feasibility study for a wholesale CBDC and planning further pilots for a retail, or “universal,” CBDC.

Deputy Governor Chu Mei-lie highlighted tokenization as a major goal, with the CBDC positioned to anchor tokenized deposits, stablecoins, and serve as an extra payment option in a tokenized world.

Key Developments:

• Universal CBDC Capabilities: Wallet creation, exchange, transfers, shopping, and digital coupons have been tested with five commercial banks.

• Scalability: The CBDC platform currently supports 20,000 transactions per second, covering Taiwan’s 23 million residents, with plans to increase capacity.

• Offline Functionality: The Central Bank is researching options for offline CBDC use.

• Global Integration: Ongoing collaborations with BIS and Swift aim to enhance Taiwan’s role in the global digital finance ecosystem.

Taiwan’s CBDC initiative reflects a commitment to secure, modern digital finance that supports tokenized assets, expands financial inclusion, and streamlines cross-border payments.

In the private sector, Taiwan’s largest crypto exchange, MaiCoin, is preparing to launch a New Taiwan Dollar-backed stablecoin (TWDC) at a 1:1 ratio with the NTD. Led by Leo Seewald, former BlackRock Taiwan head and director at MaiCoin, this initiative aims to foster a stable, regulated digital currency ecosystem in Taiwan.

Seewald views stablecoins as key to bridging traditional finance with the future of digital assets. By ensuring TWDC’s stability and alignment with Taiwan’s regulatory framework, MaiCoin aims to create a trusted platform for crypto transactions and investment.

MaiCoin’s Strategy:

• Focus on Stability: TWDC will be conservatively managed to ensure liquidity and minimize risk, distinguishing it from more volatile crypto assets.

• Collaboration: MaiCoin is engaging with local and international partners including payment platforms, financial institutions, and tech companies to support TWDC’s adoption in Taiwan and beyond.

• Regulatory Engagement: Taiwan’s policymakers are actively engaging with MaiCoin, emphasizing collaboration for a safe and transparent crypto ecosystem.

MaiCoin’s stablecoin initiative represents a significant step in Taiwan’s evolving crypto landscape, aligning with broader national efforts to integrate stable, secure digital assets into everyday financial activities.

Why Local Currency Stablecoin?

XREX, a Taiwan-based blockchain financial institution licensed by the Monetary Authority of Singapore, is at the forefront of stablecoin adoption in Asia. As a co-organizer of the Stablecoin Summit 2024, XREX promotes collaboration between stablecoin issuers, DeFi protocols, and traditional financial institutions to:

• Drive efficient cross-border payments

• Enhance financial inclusion, particularly in emerging markets

Benefits of a Local Currency Stablecoin

CEO Wayne Huang emphasizes the importance of regulatory-compliant stablecoins, which aligns with XREX’s vision of a secure, regulated blockchain ecosystem. An NTD-backed stablecoin would offer key benefits for Taiwan:

• Reduced Reliance on Foreign Currencies: Enabling digital transactions without converting to foreign currencies.

• Lower Transaction Fees: Providing more affordable cross-border payment options.

• Simplified Trade: Streamlining transactions for businesses and individuals alike.

• Enhanced Stability: Giving Taiwan’s citizens and businesses a reliable digital currency option.

Through these initiatives, XREX aims to position Taiwan as a leader in blockchain finance, using stablecoins to support local economic growth and innovation.

Security and Fraud

Taiwan has recently intensified efforts to combat crypto-related crime, highlighted by its largest cryptocurrency money laundering case to date, involving 324.2 million USDT. 

The main suspect, surnamed Chiu, along with three accomplices, allegedly directed victims to transfer funds to fraudulent accounts. These funds were converted into cryptocurrency, transferred to overseas exchanges, and cashed out. Confiscated assets included luxury vehicles, high-end watches, work phones, and narcotics.

In response to cases like this, Taiwan’s Legislative Yuan introduced the Virtual Asset Management Bill, aiming to enhance consumer protection and regulatory oversight. Key measures in the bill include:

• Segregating Customer Funds: VASPs must separate customer assets from company reserves.

• Internal Controls: Mandated audits and control systems to reduce fraud risks.

• Licensing: VASPs without a license may face fines between 2–20 million TWD ($60,000–$600,000), with a six-month compliance period for existing firms.

This legislation reflects Taiwan’s commitment to a secure and compliant cryptocurrency industry, focusing on consumer safeguards to deter fraud.

Further exposing vulnerabilities within crypto, Taiwan’s "Creative Private Room" scandal, often compared to South Korea's Nth Room, revealed severe abuses in the digital space. This platform distributed illegal videos of underage exploitation, using blockchain wallets to handle payments. 

XREX, a blockchain financial institution, conducted an in-depth investigation into the money flow linked to “Creative Private Room,” tracking on-chain transactions from four wallets associated with the platform. XREX’s report revealed the payment network behind this operation, pinpointing key actors and potential beneficiaries.

The XREX report highlights the need for strengthened digital asset regulations in Taiwan, raising important questions:

• User Identification: How can wallets used in criminal activities be connected to real identities?

• Transaction Tracking: What tools can trace illicit funds and reveal the structure behind criminal operations?

These cases emphasize the urgency of Taiwan’s regulatory developments, including stricter AML standards, VASP registration, and proposed digital asset legislation. With these measures, Taiwan is building a more transparent crypto ecosystem capable of identifying and preventing illicit activities.

Conclusion

Taiwan’s approach to cryptocurrency balances innovation with strong consumer protection and security measures. By establishing a robust regulatory framework, Taiwan aims to create a safe, transparent ecosystem where digital assets can thrive responsibly.

From stablecoin initiatives to the XREX investigations and new regulations, Taiwan’s proactive measures set a regional standard for balancing growth with oversight. Through collaboration and a commitment to security, Taiwan is paving the way for a secure, accessible future in digital finance.

Reference

• https://international.thenewslens.com/article/187046

• https://restofworld.org/2023/taiwan-asia-crypto-capital/

• https://winklerpartners.com/is-it-legal-for-companies-to-receive-cryptocurrencies-from-individuals-to-assist-them-with-trading-in-taiwan/ 

• https://www.ledgerinsights.com/basel-committee-consult-stablecoins-this-year/

• https://www.taiwannews.com.tw/news/4442163

• https://www.theblock.co/post/299888/taiwan-forms-crypto-industry-association-as-major-step-toward-self-regulation 

• https://xrex.io/stablecoin-summit-2024-returns-to-singapore/ 

• https://www.binance.com/en/square/post/2023-11-01-taiwan-authorities-bust-largest-cryptocurrency-related-money-laundering-case-1591982 

• https://xrex.io/xrex-report-taiwan-nth-room-analysis-en/ 

Overview

Taiwan's salary landscape reflects its economic evolution, highlighting how certain sectors have surged ahead while others lag. Since the 1980s, the average earnings across various industries reveal Taiwan's shifting economic priorities and global market changes.

• Financial and Insurance Activities lead in earnings, with average salaries recently surpassing NT$100,000 (Thousands), signaling strong performance in Taiwan's finance sector.

• Information and Communication follows closely, reaching approximately NT$80,000. This growth aligns with Taiwan’s reputation as a tech powerhouse.

• Accommodation and Food Service Activities remain lower, averaging around NT$35,000, showing the challenges faced by Taiwan's lower-wage service sectors.

Financial Sector Growth

High salaries in Taiwan's financial sector reflect the country’s maturing economy, where financial services play an increasingly crucial role. The growing demand for financial expertise continues to drive wages upward, attracting talent and reinforcing the stability of the sector.

Tech Industry Expansion

Taiwan’s position in the global tech supply chain, especially in semiconductor manufacturing, has led to substantial salary growth in the Information and Communication sector. This growth underscores Taiwan's competitive edge in technology and the high demand for skilled professionals in this field.

Service Sector Pressures

Hospitality and related service industries face persistent challenges, including seasonal demand fluctuations and the impact of global crises like the COVID-19 pandemic. These issues contribute to slower wage growth and highlight the difficulties these sectors encounter in maintaining competitive salaries.

Final Thoughts

Taiwan’s focus on digital transformation and sustainable industries may further boost salaries in tech and finance. However, addressing wage stagnation in lower-earning fields like hospitality remains a challenge for policymakers.

Taiwan’s salary data highlights a clear disparity between high-earning sectors like finance and tech versus lower-paying service industries. Closing these wage gaps will be essential for fostering economic inclusivity as Taiwan continues its economic growth journey.

AI Industry Overview

In recent years, the Artificial Intelligence (AI) industry has taken the world by a storm. As of 2024 the global AI market size sits at US$184 billion. This industry has grown by 97% since 2020 where its global market size was at US$93 billion. Analysts are forecasting this industry to reach a market valuation of US$243 billion by 2025 and US$826 billion by 2030. This growth is being led by industry leaders such as:

1. OpenAI

2. Nvidia

3. Meta

4. Microsoft

5. Google

The AI industry covers a wide range of sectors and companies working in many different things. OpenAI and Nvidia provide us with a good contrast on how vibrant the AI ecosystem is. OpenAI is an artificial intelligence research company dedicated to advancing artificial general intelligence (AGI). While Nvidia is software and fabless company which designs and supplies graphics processing units (GPUs) which then are used to train the AI models.

To understand if the industry is inflated it is important to understand the advancement of the industry. A good example would be taking the most popular AI generative model, GPT from OpenAI. Moving forward is the comparison of GPT 3.5 Turbo which was launched in November, 2023 and GPT 4o that was launched earlier this year in May, 2024.

According to the data from Artificial Analysis, an Independent analysis of AI models and API providers, the newer model GPT 4o is significantly better from its prior model GPT 3.5 turbo in providing better quality response and speed. Do keep in mind that its better performance also comes with a higher cost. 

Global AI Market

There has been a huge influx of new AI startups appearing everywhere around the globe with most of them utilizing generative AI APIs as the backbone of their services. These are a series of the biggest generative AI startups alongside the amount of investment they managed to raise as of August 28:

With AI being a relatively new industry, companies are flocking in trying to get into the space early in hopes of getting a huge return in the future. A chart from Stanford University estimates that the sum of assets and acquisitions from minority stakes, private investments, and public offerings reached a total of $934.2 billion from 2013 to 2022. Annual investment has recently peaked at over US$276 which was one year prior to the release of ChatGPT.

Alongside receiving a huge influx of investment from companies, AI is also disrupting the market of Startup Investments. Data from Crunchbase have shown that investments to non-AI companies have gone down from 85% in 2020 to 65% in 2024. This is an indicator that investors are now focusing more to invest into new AI-related companies. 

But not all of these are pure AI companies like the generative AI focused OpenAI and Anthropic which are developing the core technology. Some companies in this category may only be using AI models from generative AI focused companies as a feature that caters to many other industries.

Investor demand and optimism on the AI industry can also be shown in the stock market where some tech companies that are involved with building and advancing the AI industry’s infrastructure are experiencing a notable increase in value. 

The following table is formatted in stock name, current trading price, and YTD percentage gain as of September 11:

Nvidia has been outperforming all the other AI related stocks, this is mainly caused due it being the biggest Graphics Processing Unit (GPU) manufacturer. GPUs are used to train Large Language Models (LLMs) and AI models and with AI driving a 1220% surge in demand for computer power, this increased Nvidia’s revenue and made it play a pivotal role in the AI industry. Resulting to the significant increase of 173% YTD of its stock price.

Taiwan’s AI Market

Overview

Taiwan is currently producing over 90% of the most advanced semiconductors that are used in making GPUs and other necessary infrastructures to train and develop AI. The AI ecosystem in Taiwan is also well-rounded, having a lot of companies and startups integrating AI technology in other industries such as advertising, health care, beauty, and many others.

While the AI industry is booming with most of the stocks in the stock market making all time highs this year, some stocks have fallen a significant amount from their all-time-highs with most of them being computer hardware manufacturers.

The following table is formatted in stock name, current trading price, and YTD percentage gain as of September 11:

Companies like Gigabyte and Wiwynn both made significant gains this year with their stock appreciating by 49.41% and 68.47% at their year-to-date all time highs respectively. 

Wiwynn’s stock price drop is caused by the significant decline in revenue in the third quarter of 2024, with a 33.7% year-on-year decrease. While the company’s AI server revenue has increased, Wiwynn struggles to compete in the broader market.

Gigabyte’s cause of stock price drop is no different from Wiwynn, their earnings have been lower than expected by investors which was caused by the weakening demand for PC and gaming-related products. As of recently Gigabyte has been putting their efforts to break into the AI industry with them introducing AI infrastructure solutions and high-performance computing systems at COMPUTEX.

Global Influence

Taiwan has a lot of companies that are involved in the local and global AI ecosystem. These companies’ have a notable presence when it comes to the advancement of AI technology. Here are some of the companies alongside with their influence in this industry:

1. TSMC

Considered to be the best and largest semiconductor manufacturer supplying to tech giants like Nvidia and Apple. TSMC is known for their cutting-edge manufacturing processes.

2. ASUS

ASUS have positioned their company to have global reach while being a notable player in the AI-driven PC market. They have started making strides in the AI industry through innovations in machine learning.

3. Foxconn

One of the largest electronics manufacturers while leveraging AI technology to be integrated into factories globally for automation in manufacturing.

4. Wiwynn

Known for designing and manufacturing cloud-based IT infrastructures such as AI servers where it supports many large-scale AI applications worldwide including data processing and machine learning. 

5. MediaTek

Plays an important role in producing smartphone chips, making AI accessible to millions of consumers worldwide. MediaTek chips integrate AI processing units for tasks such as image recognition and voice interaction.

At COMPUTEX 2024, Nvidia showcased their partnerships with many Taiwanese companies that focus on developing the AI industry. Some of the Taiwanese companies that are involved are:

1. ASUS

2. GIGABYTE

3. Wistron

4. Wiwynn

5. Supermicro

6. Pegatron

7. QCT (Quanta Cloud Technology)

Nvidia has also recently announced its plans to establish their first AI research and development center in Taiwan which will be supported by the Ministry of Economic Affairs. The center will be focusing to develop AI platforms and serve as an incubation zone for talents in collaboration with  local universities.

Government Involvement

In the past, Taiwanese government Executive Yuan has rolled out an “AI Taiwan Action Plan” which discusses the advance tactics the government is going to execute over the year 2018-2021. This plan consists of 5 major components which covers the scope of:

1. Developing AI talent

2. Promoting Taiwan’s lead role in AI

3. Building Taiwan into an AI innovation hub

4. Liberalizing laws and opening test grounds

5. Transforming industry with AI

Recently this year on August 24, The Ministry of Digital Affairs announced that it will invest NT$10 billion (US$313 million) in domestic AI startups over the next 10 years. MODA Minister Huang Yen-nun stated that the first seven years will be dedicated to investments and the last three years to divestments.

Besides funding the development of AI, the Taiwanese government has started working on drafts for artificial intelligence law. Back on July 16, The Cabinet-level National Science and Technology Council (NSTC) revealed a draft proposal covering the use and reliability of AI and mitigation of the risks associated with it such as labeling AI generated content.

The government’s efforts of trying to make Taiwan as the leading country in the AI industry are further shown when President Lai Ching Te vows to to turn Taiwan into an “AI island” during Computex Taipei. President Lai pointed out the three fundamental policies that the government would implement:

1. Ensuring a reliable supply of electricity and providing a diverse form of “green energy”.

2. Setting up supercomputer infrastructures to ensure the constant development of AI in Taiwan.

3. Cultivating talents in relevant fields such as information and communication technology, wafer and semiconductor manufacturing, and the AI industry.

President Lai further added the government’s expectations that more than 1 million small and medium-sized companies around the country would apply AI in running their businesses. This implies that the Taiwanese government is very optimistic and supportive of the AI industry.

Taiwanese AI Startups

1. Appier

A cloud-based multi-channel advertising and marketing campaign management solutions provider that uses AI and RTB technology to track user behavior across devices.

2. Perfect Corp

AI and AR-based virtual makeup application solutions that enable users to virtually try makeup through the application's facial mapping technology.

3. Gorilla

Offers AI based video data analytics solution that leverages AI to automate stream processing and analyze video data to solve big data related issues.

4. Vpon

AI powered big data analytics platform for advertising teams that includes technology such as AI creative generator, AI optimization and more.

5. Aiello

NLP and cloud-powered platform provider to develop voice bots that provide tools to create tailored well-rounded voice bots into a single AI model.

6. iKala

AI powered influencer marketing platform and cloud management solutions that provide influencer meaningful insights on their social media metrics.

7. FaceHeart

Heart monitoring application which utilizes AI technology to monitor body vitals such as heart rate, blood pressure, and others.

8. CyCraft

A platform which offers incident response solutions available through their diverse product lines while also assisting in detecting real time threats.

Challenges

With the large growth that the AI industry is experiencing there are several limiting factors to it such as increased computing power requirement, storage capabilities, and data management. Another point to keep in mind is the cost and profitability of the AI industry. Take OpenAI as an example, it has spent roughly US$7 billion on LLM (Large Language Models) training & inference, additionally OpenAI have spent around US$1.5 billion on staffing. Analyst US$700,000 per day to run ChatGPT through Nvidia’s AI servers. It has been reported that OpenAI’s annualized revenue is US$3.4 billion, making them burning money to keep their operation running.

On the other hand, one of the most famous semiconductor manufacturer companies, TSMC has reported a Q2 revenue of NT$673.51 billion and a net income of NT$247.85 billion resulting in an increase of 40% and 36% year-over-year respectively. According to the data above companies that are building the infrastructure for AI companies are currently more profitable than the AI companies themselves.

Regulations can also be a roadblock, with unclear regulations and consumer privacy being a concern some people remain skeptical about this industry. The AI industry is also not aligned with the carbon regulations with the escalating and localized environmental costs of AI.

• A report estimated that with 3.5 million H100 shipments through 2023 and 2024 can consume 13.1 TWh of power annually. 

• Morgan Stanley is estimating global data center power use to triple from ~15 TWh in 2023 to ~46 TWh in 2024.

• Wells Fargo is projecting AI power demand to surge from 8 TWh to 52 TWh, which translates to an increase of 550% by 2026.

• AI training is expected to drive power demand at 40 TWh in 2026 and 402 TWh by 2030.

Final Thoughts

Despite the hurdles that the AI industry needs to face, professionals are confident that AI is here to stay. While some people may consider this industry a tech bubble, it is to be expected with an emerging industry.

According to sources, around 70-80% of AI companies have failed. This really shows how cut-throat the industry is, survival of the fittest where only the best companies can emerge on top.

Addressing the concerns on how to make the AI industry sustainable, some suggests:

1. Sustainable energy source

2. Maximize byproducts from the AI industry

3. considering the entire lifecycle of hardware

4. choosing more energy-efficient algorithms

5. optimizing the utilization of data centers

With the amount of help that AI has given to professionals it is important to think critically about this industry and pin-point the critical issue to be addressed with hopes of it getting improved and solved in the future.