Taiwan's Financial Supervisory Commission (FSC) announced on June 19th the approval of three commercial banks — CTBC Bank, KGI Bank, and Union Bank — to pilot Bitcoin custody services for a six-month trial period. This marks Taiwan's first banking initiative to safeguard virtual assets (bitcoin) under regulated oversight.
Key Details of the Custody Pilot Program
- Maximum Exposure Limit: NT$590 million (~US$20 million) per bank for bitcoin holdings
- Trial Duration: 6 months (followed by mandatory compliance reporting)
- Approved Participants: CTBC, KGI, and Union Bank (with Cathay United Bank under review)
- Launch Framework: FSC's "Virtual Asset Custody Business" thematic pilot program established November 2024
How Banks Secure Bitcoin Assets
Taiwanese banks employ two primary custody mechanisms:
- Offline Cold Wallet Storage
Multi-Party Key Fragmentation:
- Client private keys are divided into encrypted fragments
- Fragments stored across cloud servers, HSMs (Hardware Security Modules), or hybrid architectures
- Requires client authentication for transaction authorization
"All participating banks currently utilize key fragmentation with domestic virtual asset exchanges as partners," stated Wang Yun-zhong, Deputy Director of the FSC's Banking Bureau.
Regulatory Framework & Future Outlook
✅ Post-Trial Requirements:
- Detailed operational reports covering transaction volumes, internal controls, AML procedures, and customer complaints
- FSC to evaluate potential permanent regulatory adjustments
📅 Application Timeline:
- Open period: January 1 - April 30, 2025
- Minimum 2 additional private banks expected to join
Industry Impact Analysis
| Stakeholder | Key Benefit |
|---|---|
| Banks | New fee-based revenue stream (0.5-2% custody fees) |
| Exchanges | Enhanced security via third-party asset segregation |
| Investors | Increased trust in virtual asset platforms |
👉 Explore secure crypto custody solutions
FAQ: Bitcoin Custody Services
Q: How does bank custody differ from exchange wallets?
A: Banks provide institutional-grade security audits, insurance coverage, and regulatory compliance absent from most exchanges.
Q: Can individuals access these custody services?
A: Initially targeting corporate clients; retail access depends on trial outcomes.
Q: What happens if bitcoin prices fluctuate dramatically?
A: Exposure limits are calculated in USD equivalents, with daily valuation adjustments.
Q: Are other cryptocurrencies included?
A: Currently bitcoin-only; expansion requires separate FSC approval.
👉 Bitcoin custody security standards
The FSC emphasizes this initiative as a strategic step toward Taiwan's responsible integration with the digital asset ecosystem while maintaining rigorous financial oversight.