Many people are interested in cryptocurrency but hesitate to take the plunge. Beyond price volatility, concerns about funds getting stuck on exchanges or becoming inaccessible keep potential investors at bay.
As of 2025, 21 platforms in Taiwan have completed anti-money laundering (AML) compliance filings (source). While this confirms these platforms are "legitimate," it doesn’t necessarily mean they’re "secure." Taiwan’s regulatory framework for virtual assets remains underdeveloped, leaving investors with limited recourse if issues arise.
How Exchange Protections Work (and Where They Fall Short)
1. Fiat Trust Accounts: A Partial Shield
Exchanges like MAX and BitoPro advertise "fiat trust accounts" and "crypto insurance" as safety nets. However:
- Trust accounts only cover cash reserves (e.g., unspent TWD). Once converted to crypto (e.g., Bitcoin), funds exit the protected trust.
- Think of it as a safe deposit box for cash—once you trade for crypto, the box no longer applies.
2. Crypto Insurance: Murky Coverage
Some platforms insure cold/hot wallets, but policies often lack transparency:
- What triggers a claim? Maximum payout? Deductibles?
- Most users can’t access detailed terms, leaving gaps in real protection.
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Why Taiwanese Investors Treat Local Exchanges as "Pit Stops"
Due to these limitations, many users leverage local exchanges as on-ramps:
- Convert TWD to stablecoins (e.g., USDT).
- Transfer to global exchanges for trading (wider coin selection, better liquidity, multilingual support).
This workaround highlights a systemic issue: without mature regulations, Taiwan’s market struggles to attract long-term investors. Until accountability is clear, exchanges remain transitional tools.
The Silver Lining: Upcoming Regulations
Taiwan’s Virtual Asset Service Act draft was released on March 25, 2025 (source), proposing:
- Licensing requirements for operators.
- Enhanced consumer protections.
- Anti-fraud and market manipulation measures.
This law could stabilize the ecosystem—if enacted swiftly.
FAQ: Crypto Exchange Safety
Q: Are funds in a trust account FDIC-insured?
A: No. Trust accounts are separate from banking insurance and only cover cash, not crypto holdings.
Q: Can insured exchanges guarantee full asset recovery after a hack?
A: Rarely. Insurance often has caps/exclusions, and claims depend on policy fine print.
Q: Why do global exchanges feel safer?
A: Many comply with stricter jurisdictions (e.g., EU’s MiCA), offering clearer safeguards.
Q: Should I keep crypto on exchanges long-term?
A: Not recommended. Use exchanges for trading, then transfer to self-custody wallets.
👉 Learn how to secure your crypto beyond exchanges
Stay tuned for updates on Taiwan’s crypto regulations and actionable insights!
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