Blockchain, one of the emerging disruptive forces alongside AI and big data, is revolutionizing our financial systems, industries, and cities to their core. As global players rush to tap into the potential of distributed ledger technology (DLT) and blockchain, in Taiwan, the blockchain craze is still simmering quietly.
Over the weekend (31 Mar—01 Apr), Taipei hosted its first major blockchain event, BlockCity, co-organized by blockchain accelerator Blockcamp.io and local blockchain media BlockTempo. The event welcomed entrepreneurs, industry leaders, and a group of avid blockchain advocates from high schoolers to tech veterans to share their thoughts on the current state of the technology in Taiwan and how to help promote the technology. The event, which was themed around smart cities and fintech, featured panel discussions, workshops, exhibitions, and a hackathon.
Taiwan’s techies have been waiting for an event like this for a long time—although a self-proclaimed “high-tech island,” Taiwan’s blockchain industry is still nascent and there haven’t been many events to promote conversations and engage local communities. The Taiwanese government has a track record of taking the wait-and-see approach when it comes to emerging technologies. And so during the two-day event, the conversations that stood out circled around educating legislators, establishing a regulatory framework, and other preliminary issues.
Not another missed opportunity
Blockchain has created disruptions and opportunities across the world, many players in Asia like China, Singapore, Hong Kong, and Japan are all eager to explore the potential of the technology.
There is also a window of opportunity for Taiwan… but, it’s small.
“On the financial side, Taiwan has an opportunity to influence these new systems—payment systems and inter-country systems—that are being built right now… and it’s a shame that Taiwan is still not stepping up like other countries,” Carl Wegner, the head of Asia for the distributed ledger technology (DLT) company R3, told Technode in an interview following his keynote speech. R3 is working with over 110 banks, financial institutions, regulators, trade associations, and technology companies to develop a DLT explicitly designed for financial services.
Wegner explained that a DLT-based cross-border system is being created, and players who are “in the game now” get to influence the standards that will benefit their markets. However, he noted an unusual characteristic that is favorable for developing DLT technology in Taiwan’s financial sector: the presence of large banking conglomerates that have different businesses such as commercial banks, securities companies, insurance companies all under one umbrella; whereas in many countries those businesses are separate entities. “There is huge potential for them to be able to manage information a lot more efficiently in the future if they were to use distributed ledger technology,” said Wegner.
Better understanding and better regulatory framework
One of the key takeaways from the event is that Taiwan needs to find a way to regulate DLT and blockchain.
Speaking on the panel on blockchain regulations, Jason Hsu (许毓仁), congressman and blockchain advocate, said that the community plays a key role in helping the government better understand blockchain and the best practices. He explained that in Taiwan many legislators still don’t know enough about DLT and blockchain to care. Hsu added that the government has maintained an ambiguous attitude toward cryptocurrency in that they don’t encourage or discourage it.
Wegner also said regulators’ lack of understanding is one major roadblock. “The regulators have to start learning and doing projects,” Wegner said, “Learning about something doesn’t mean that you’re going to make a decision, but if you don’t learn you don’t know how to make the decision.”
To establish an enabling environment for blockchain companies and the industry to grow, the panel recommended the government learn from other countries’ best practices and their frameworks. The recommendation of emulating what Japan has done after the $500 million cryptocurrency theft—establishing self-regulatory organizations (SRO)—was popular among panelists and the audience.
Taiwan doesn’t have a big enough market, and companies are leaving the island for better opportunities. Huang Kunjia, CEO of inno4G says that Taiwan cannot afford to take a hands-off approach and miss the window of opportunity. Huang said countries like Singapore and Switzerland have advanced regulations on DLT and blockchain, and they are attracting talent and capital. With China’s current ban on ICOs, capital control issues as well as the US SEC tightening crypto regulation, Taiwan has a tremendous opportunity to attract talent and capital. Huang added that even though Japan has an established crypto regulatory framework, it is still regarded as more closed-minded towards foreign investments.
Taiwan’s blockchain startup community is vibrant, and foreign entrepreneurs are curious and interested to explore the market. Opportunities are emerging, and the businesses are calling on the government to establish a regulatory framework.
During the discussion on blockchain in businesses, Bitmark CEO Sean Moss-Pultz said, “There are all these regulatory bodies that could regulate a token… it could be the tax authority, it could be the central bank, it could be the FSC [Financial Supervisory Commission]… what is needed is for Congress to pass a law that says clearly what you could do with this.” Moss-Pultz said, “Taiwan has a great opportunity and fantastic people, and if they can put the regulatory framework in place then they can flourish.”