What happened?
Taiwan's FSC fined a total of over NT$3 million to three virtual currency operators, mainly due to serious deficiencies in anti-money laundering, customer review, and transaction monitoring.
In addition to the three companies fined this time, the ACE Exchange and Rybit, as well as industry giants MaiCoin and Bito Group, have also been fined for similar violations. This indicates that the FSC's regulation of virtual asset service providers (VASPs) has moved from initial regulations to a normalization of heavy penalties, and the frequency of inspections and severity of penalties will continue to increase in the future.
A series of fines also highlight the significant challenges virtual currency operators face in establishing sound internal controls, risk assessments, and customer review mechanisms. They must continually invest resources to meet compliance requirements set by regulatory authorities.
Three virtual currency operators were heavily fined, exposing deficiencies in anti-money laundering measures.
Recently, the Taiwan Financial Supervisory Commission (FSC) Securities and Futures Bureau has launched strict law enforcement against virtual currency (VASP) operators. Three companies were fined a total of over NT$3 million due to inadequate anti-money laundering measures. This not only signals the FSC's heightened emphasis on preventing money laundering and terrorist financing but also indicates that Taiwan's virtual asset service industry is entering an 'era of heavy penalties.'
From November to December 2024, the FSC conducted project inspections for anti-money laundering and combating terrorist financing on Hoya Digital Technology (HOYA BIT), Chain Technology Co., Ltd. (XREX), and Pioneering Digital Technology (ZONE Wallet), finding significant deficiencies in all cases, which were announced on July 17, 2025.
HOYA BIT
Hoya Digital Technology was fined NT$1.5 million, the highest amount in this round of fines.
The main violations include:
Insufficient internal control systems and risk assessments, failing to adequately understand the purpose and nature of business relationships with non-high-risk individual customers, and improperly assessing the risk of beneficial owners who hold significant political positions.
Failure to implement customer risk assessments, enhanced reviews for high-risk customers, and regular reviews, and even failing to settle accounts for warning customers as required.
For transactions reported by banks as suspected fraud, there was a failure to effectively assess and report suspected money laundering transactions (STR).
The assessment records for name verification operations were not adequately maintained.
XREX
Chain Technology Co., Ltd. was fined NT$1.02 million, with violations including:
Failure to investigate and assess suspected money laundering or terrorist financing transactions.
Inadequate customer review measures, failing to conduct enhanced reviews on high-risk customers, and approving account openings without verifying wealth and source of funds.
For customers reported by banks as suspected fraud, there was a failure to re-confirm their identities.
There are issues with retaining customer personal data in external company systems without appropriate security measures.
ZONE Wallet
Pioneering Digital Technology was fined NT$500,000, with the main violations being:
Improper execution of customer reviews, including approving registrations in situations where business relationships should have been refused.
Failure to verify the wealth and source of funds of high-risk customers.
Failure to assess the reasonableness of maintaining the original risk level for 'grey list' customers.
What do the exchanges say?
In the face of penalties, both Hoya Digital Technology (HOYA BIT) and Chain Technology Co., Ltd. (XREX) issued statements expressing their humble acceptance of the regulatory authorities' corrections and have begun reviewing and improving. Both companies emphasized their commitment to fully comply with regulatory requirements and continuously enhance compliance in anti-money laundering, user reviews, transaction monitoring, and data preservation, aiming to rebuild market trust.
HOYA BIT Response
We sincerely explain the results of the financial inspections and administrative penalties announced by the Financial Supervisory Commission on July 17, 2025; Hoya Digital Technology Co., Ltd. (HOYA BIT) humbly accepts these findings and thanks the regulatory authorities for their valuable guidance and suggestions, allowing us the opportunity to further examine and optimize our internal operations.
HOYA BIT is an important member of Taiwan's virtual asset service providers and fully understands the significant social responsibility in financial compliance and protecting customer assets. Therefore, during the inspection process, we actively maintain positive communication with regulatory authorities, fully cooperate with financial supervision operations, and continue to conduct internal audits and review measures, while formulating clear and specific improvement plans that are currently being actively and continuously promoted.
This administrative action by the regulatory agency has not affected any customer rights or the normal operation of the platform; investors and users can continue to use the services we provide with peace of mind. In the future, HOYA BIT will continue to serve users with higher standards, actively cooperate with the regulatory authorities and the self-regulatory norms and legal guidance of the virtual currency association, and adhere to professional, transparent, and safe operational principles to promote the healthy development of Taiwan's virtual asset market.
We once again thank the regulatory authorities for their guidance and correction. HOYA BIT will uphold a responsible attitude, continue to promote internal improvements, and strive to enhance user and market trust and satisfaction.
XREX Response
Chain Technology Co., Ltd. sincerely thanks the regulatory agency for their guidance regarding the administrative penalty announced on July 17 by the FSC; we humbly review the deficiencies and have begun improvements and optimizations. In areas such as anti-money laundering and fraud prevention, combating terrorist financing, user review, transaction monitoring, and data preservation, we strive to meet regulatory expectations and effectively protect user rights.
Chain Technology Co., Ltd. operates the XREX exchange in Taiwan, continuously demanding the highest standards of itself, complying with the requirements of regulatory authorities, adhering to the self-regulatory norms of the virtual currency association and relevant regulations, actively promoting the positive development of the virtual currency industry, and establishing long-term trust among government, industry, and users.
What is a financial inspection?
Financial inspections, formally known as 'financial examinations,' are routine or project-specific reviews conducted by financial regulatory agencies on financial institutions. The main purpose is to ensure that the operations of financial institutions comply with relevant regulations, have sound internal controls, and effectively prevent financial crimes such as money laundering and terrorist financing.
The concept is somewhat akin to a final exam in school, except the subjects being tested are banks, insurance companies, securities firms, and even financial service providers like virtual currency operators. The examiners are the inspection personnel from the FSC.
The focus of financial inspections usually includes:
Regulatory compliance: Inspecting whether financial institutions comply with all relevant financial laws and regulations, such as the Banking Act, Securities and Exchange Act, and Anti-Money Laundering Act.
Internal control: Assessing whether financial institutions have established complete systems and processes to manage risks and prevent errors and fraud.
Risk management: Reviewing how financial institutions identify, measure, monitor, and control various risks, including credit risk, market risk, operational risk, liquidity risk, etc.
Financial soundness: Analyzing whether the financial status of financial institutions is sound and whether they have sufficient capital to bear risks.
Consumer protection: Ensuring that financial institutions can fully protect customers' rights and interests when providing services.
Anti-money laundering and combating terrorist financing: This has been a top priority for financial inspections in recent years, checking whether institutions have established effective mechanisms to identify, monitor, and report suspicious transactions to prevent illegal fund flows.
Why is a financial inspection important?
Financial inspections are crucial for maintaining stability and order in the financial market. Through these inspections, regulatory agencies can detect potential issues or violations of financial institutions early and require them to correct these issues, preventing risks from escalating. This not only protects the rights and interests of a large number of financial consumers and investors but also enhances the transparency and security of the entire financial system.
In the field of virtual currencies, due to its emerging and rapidly developing nature, financial inspections are an indispensable part of preventing illegal activities such as money laundering.
The era of heavy penalties for VASP anti-money laundering measures: From the first fine to industry giants
The penalties imposed on these three virtual currency operators are not isolated cases but are a continuation of the FSC's increasingly stringent supervisory attitude towards VASPs. Looking back at Taiwan's law enforcement trajectory against virtual asset service providers, it is clear that regulatory intensity is gradually escalating.
The first fine imposed by Taiwan's Financial Supervisory Commission (FSC) on VASPs began in July 2024. Ace Digital Innovation Co., Ltd. (ACE Exchange) was fined NT$1.52 million for failures including not implementing KYC (Know Your Customer), failing to verify the source of customer wealth, not reporting suspected money laundering transactions, and lacking adequate internal control mechanisms.
This fine not only establishes the regulatory authority's compliance standards for the virtual asset industry but also opens the curtain for a series of subsequent inspections and penalties. Subsequently, Rybit, which has ceased operations, was also fined NT$1.02 million for violating anti-money laundering and personal data protection regulations.
By November 2024, the two major exchange giants in Taiwan, MaiCoin Group (Modern Wealth Technology Co., Ltd.) and Bito Group, also did not escape unscathed, each fined NT$1.5 million by the FSC under the Anti-Money Laundering Act.
The FSC has clearly stated it will continue to strengthen supervision of VASP's anti-money laundering measures, and future inspection frequency and penalty severity may further escalate.
This also means that in the future, all VASP operators must prioritize anti-money laundering and combating terrorist financing as a primary operational focus, strictly adhering to relevant regulations; otherwise, they will face severe legal and financial risks.
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