Cathay United Bank, Chinatrust, and other four major banks have been approved to pilot virtual asset custody! The first phase is focused on Bitcoin and Ether.

Taiwan's virtual asset regulation has officially entered the implementation stage! Under the "Virtual Asset Custody Business" pilot program launched by the Financial Supervisory Commission, Cathay United Bank, China Trust Commercial Bank, KGI Bank, and Federal Bank have been approved to enter the Crypto Assets custody market, with the first wave of services focusing on Bitcoin (BTC) and Ether (ETH). This not only opens up a new blue ocean for the banking industry but will also change the landscape of Taiwan's digital financial ecosystem.

The Financial Supervisory Commission Opens Up, the Banking Industry Officially Enters the Crypto Assets Market

In order to promote financial innovation and improve the regulatory framework, the Financial Supervisory Commission will launch a themed pilot program for "virtual asset custody services" at the end of 2024, and will accept applications from January to April 2025. As of the end of the application period, four banks submitted applications. Finally, on June 19, KGI, Citibank, and Fubon Bank were approved to join the pilot program, while Cathay United Bank was the first to announce its business blueprint, demonstrating a proactive determination to position itself.

In addition, Taishin Bank is also being prepared under the guidance of the Financial Supervisory Commission, which announced that it will continue to accept applications from June 15, 2025, encouraging more financial institutions to participate.

Cathay United Bank's Three Highlights: Security, Compliance, Professionalism

Cathay United Bank targets high net worth individuals and corporate clients during the pilot phase, and has proposed three core strategies:

1. Multi-layered cybersecurity defense

· Use institutional-grade cold wallets to store private keys, combined with a multi-layer authorization signing process. · Introduce KYA (Know Your Address) and KYT (Know Your Transaction) technologies to strengthen on-chain transaction risk monitoring and anti-money laundering.

2. Rigorous Financial Trading Standards

· Combining years of regulatory compliance and risk management experience accumulated by banks, we provide high-standard custody services that comply with regulations.

· In the future, this will serve as a foundation to expand the liquidity and application value of virtual assets.

3. Forward-looking layout of digital financial talent

· Initiate internal professional training during the pilot phase, and collaborate with the industry to introduce the latest technologies and perspectives, promoting the upgrade of organizational knowledge.

Opportunities and Challenges of Virtual Asset Custody

opportunity

Explore new sources of income: from custody service fees to future value-added services such as staking loans and asset securitization.

Enhancing customer stickiness: Meeting the diversified allocation needs of high-net-worth clients, attracting investors who are interested in Crypto Assets but concerned about security.

Connecting Tradition and Innovation: Banks leverage their credibility and compliance advantages to become key hubs in the digital financial ecosystem.

Challenge

High security threshold: A significant amount of capital must be invested to build cold wallets, multi-signature systems, and on-chain monitoring systems. Any oversight could lead to irreversible losses.

Talent Shortage: The market lacks interdisciplinary experts who are proficient in both financial regulations and blockchain technology.

Regulatory uncertainty: Global regulations are evolving rapidly, and banks need to maintain a high level of compliance flexibility to respond to policy changes.

Key Turning Point of Digital Finance in Taiwan

This pilot program marks the official entry of Taiwan's banking industry into the virtual assets sector, with Bitcoin and Ether as the first wave of custody targets, signifying a new stage in the integration of traditional finance and the crypto market.

In the future, as more banks join and the scope of services expands, Taiwan is expected to secure a place in the Asian digital asset financial services market.

Conclusion

The inclusion of Cathay United Bank, Citibank, KGI Bank, and Union Bank has laid a foundation for the institutionalization and professionalization of virtual asset custody services in Taiwan. This is not only an important step in the transformation of the banking business but could also become a key opportunity to attract international capital and enhance market confidence. For investors, the ability to securely store Bitcoin and Ether in a familiar and trusted banking system in the future will be a significant advantage.