Jason Hsu is on a mission to turn Taiwan into a Fintech hub. This includes the development of a robust Initial Coin Offering market – in stark contrast to several Asian neighbors like China and South Korea, two countries that banned all ICOs earlier this year. A Member of Parliament in Taiwan, Hus is a founding member of the Taiwan Fintech Association, founding Chairman of FutureX – an Asia wide policy think tank and more. Hsu is a vocal iconoclast that has embraced financial disruption and he wants his country to lead the way for financial innovation in the pan-Asian region.
— jason Hsu (@augama) October 17, 2017
Recently writing on Medium, Hsu explained the current position of Taiwan regarding ICOs describing it as a “three no-policies”: the Taiwan government does not encourage, prohibit or forbid it. Effectively, Taiwan and tokenized crowdsales are in a holding pattern. Hsu was recently quoted as taking an unabashedly supportive approach with cryptocurrencies, stating;
“Just because China and South Korea are banning, doesn’t mean that Taiwan should follow suit – there is a huge opportunity for growth in the future. We should emulate Japan, where they treat cryptocurrency as a highly regulated, highly monitored industry like securities.”
Where other countries see risk to big to bear, Hsu sees opportunity.
Recently, Crowdfund Insider caught up with Hsu to better understand his point of view. Our conversation is below.
In general, how would you describe the status of Fintech in Taiwan?
Jason Hsu: The status is that Taiwan has a vibrant startup community; however,the slow progress of de-regulation has hampered innovation and scaling of startups–particularly in Fintech space where regulations sometimes can be big hurdles to overcome.
What has the Taiwan government done to boost or improve the Fintech environment? What about capital formation?
Jason Hsu: The Legislative Yuan, Taiwan’s Congress, is in the process of reviewing Fintech Innovation Experimentation Act, which I, personally, also put forth a draft.
During my Q&A session with Premier and new FSC (Financial SecuritiesCommission) chairman Wellington Koo, I specifically urged the regulatory body to impose a hands-off approach to the nascent technology and allow technologies and industry to take shape before cracking down on it. The government should apply “wait and see” attitude towards Fintech related matters.
The Fintech Act will essentially include regulatory sandbox as well as cross-departmental support and incentive programs to attract international and local venture capital to invest in Fintech in Taiwan.
I am also working with FSC and New Taipei City government to set up a Fintech Hub.
Can you explain the “Financial Technology Innovation Experimentation Act”?
Jason Hsu: I first raised the issue of regulatory sandbox in the Finance Committee Legislative Yuan in May 2016 and advised the FSC to look into model drafts of UK’s Fintech law put forth by FCA.
Later on, a draft was created by FSC Taiwan called Financial Technology Experimentation Act, which essentially includes a regulatory sandbox. Several legislators including myself, also proposed respective drafts.
My version of the bill contains: a more lenient approach to Fintech startups with multiple extensions of their experiments, waiver rights of any wrongdoing that may otherwise commit during the period of experimentation, responsible innovation, and regulatory.
Recently several Asian countries have taken a hard stance on Cryptocurrencies. What is the position of Taiwan on Crypto?
Jason Hsu: Again, I advised the government not to ban cryptocurrencies and related activities like trading and ICOs. There are several ICO startups like Cobinhood, MaiCoin and BitoEx that are originated from Taiwan. I believe if we take advantage of the void left by China and South Korea some of successful Fintech companies can be born in Taiwan.
In my address to Premier and FSC, I also urged government to look at how other countries are dealing with crypto, for example Vietnam has just opened up for crypto trading and some Northern European countries like Sweden’s central banks is legalizing it.
Japan can be a good model to follow where its regulatory body allows licensed entities to trade cryptos.
Once we have legislative framework set up, we will be able to move into a healthy state. All in all, we should treat this as an opportunity rather than a threat.
What about the fast growing Initial Coin Offering sector? How is this evolving in Taiwan?
Jason Hsu: As mentioned above, there are several startups like Cobinhood and Maicoin and etc. are working on ICO related projects. Most of the trading activities are still happening among closed peer groups, which can be scandalous sometimes. That is why I called for authorities to start studying ways to allow crypto trading to be legalized.
As far as banking sector goes, E-sun bank uses G-coin, China Trust Bank joined R3, Fubon bank uses Ethereum… I have also been speaking with investment banks who now are keen in using ICOs as an alternative to raising capital for their clients.
In the foreseeable future, ICOs should have a high probability of becoming a strong option for startups to raise capital.
Where do you believe the Crypto / ICO market is heading? How active is Crypto in Taiwan?
Jason Hsu: Crypto is unique in a way that its decentralized ledger provides point-to-point transaction records. Speaking from anti-money-laundering (AML) point of view, I urge the Taiwan government to consider employing blockchain technology to de-risk potential fraud.
In terms of Crypto and ICOs, as long as the government can remain hands-off, I believe there can be great opportunities to build Taiwan as Fintech Hub in Asia.
I believe this is an opportunity for Taiwan as China is likely to tighten on any de-centralized money flow or information flow.
Our government must think smartly in capitalizing on this void and put forward-thinking legislations forth. If we play this right, Taiwan will be able to differentiate itself from the rest of countries in Asia.
What about Blockchain / Distributed Ledger Technology?
Jason Hsu: Blockchain and distributed ledger technology are widely discussed in Taiwan. In the private sector and startup community many applications have already been created. For example, a crypto-enabled cake shop called Coin Cake has recently opened in Kaohsiung, the Southern part of Taiwan. However, in the public sector the government has been slow to adopt Blockchain.
There are a couple of reasons to this: risk-aversion and non-creative bureaucracy system.
I believe that Blockchain technology, if adopted well, can help solve many problems facing today’s outdated governmental system. It can also be used in solving IP theft such has arts, music, entertainment and other intellectual property related issues.