Lai Shih-pao criticizes USDT financial management suspected of attracting funds! FSC: Will discuss the regulation of Decentralized Finance, how do operators view

During the legislative questioning on December 19th, KMT legislator Lai Shih-pao raised multiple questions to Financial Supervisory Commission Chairman, Thomas Huang, regarding the phenomenon of the stock market's big dump triggered by the US's interest rate cut. The discussion covered global stock market dynamics, the attractiveness of encryption currencies in the market, as well as Taiwan's regulatory policies on Decentralized Finance (DeFi) and virtual assets.

Legislator Lai Shih-pao questioned the phenomenon of coin circle operators receiving $USDT and offering interest rate products, using the phrase "suspected of absorbing funds." Chairman Peng Chin-lung responded that next year's special law discussion will include debt-based financial products, and will also consider regulating Decentralized Finance, sparking discussion.

Rate cuts fail to boost stock market, legislators puzzled

Lai Shibo pointed out that according to general economic logic, the US interest rate cut should be a positive news for the stock market, but it instead led to a big dump of over a thousand points. He hopes that Peng Jinlong can analyze the main reasons professionally. Peng Jinlong said that the market's expectations for the speed of interest rate cuts fell short, coupled with uncertain international political factors, the year-end holiday effect of investors, and the impact of US inflation and tariff policies, all of which may lead to violent fluctuations in the stock market. He further mentioned that the low expectations of future interest rates in the 'dot plot' is also one of the reasons for the market's tepid response.

Capital flow into encryption currency?

During the questioning process, Lai Shih-pao mentioned that some views believe that funds flowing from the traditional market to the cryptocurrency market may be one of the reasons for the reduction of stock market funds. He mentioned that the recent surge in the price of Bitcoin has attracted the attention of the capital market. In response to this, Peng Chin-lung stated that although the trading volume of cryptocurrencies is still relatively low compared to the traditional financial market, the growth rate is astonishing, and Taiwan has also observed the increasing attractiveness of virtual assets.

Decentralized Finance product challenges regulation: Is it suspected of fund-raising?

Legislator Lai Shih-pao particularly pointed out that the exchange currency trust is based on stable coins (such as: $USDT), providing a short-term fixed interest rate of up to 4.5% to 5.5%, known as 'guaranteed profit'. He believes that such products are similar to past fundraising events, and questions whether the FSC has regulatory responsibility for this.

Peng Jinlong responded, "This is the so-called part of Decentralized Finance." Transactions related to Decentralized Finance are currently within the scope of regulatory supervision by the FSC, but specific regulations are still being developed. He revealed that the FSC will hold a public hearing on the special law for virtual asset management in January 2025 and submit it to the Executive Yuan for deliberation in June.

The currency circle promotes financial products, which is unfair to compliant third-party payment operators

Lai Shibo said, "We need to establish some rules. Third-party payments, for example, on a certain platform, I deposit ten thousand yuan there, I use two thousand yuan to buy things, and there are eight thousand yuan left. He takes the eight thousand yuan to invest and gives me a fixed interest rate of 4%, can he? You say no, third-party payments in the past, you say no, but you can do this with BitGo, this is strange."

Peng Jinlong responded, "I didn't say it was possible." He said that this is something evolving worldwide and will be discussed in the future law.

BitoEX's response: Not from Decentralized Finance protocol earnings

Bitopro responded to Chain News that the debt of Bitopro exchange is based on the existing lending relationship between Bitopro and third parties, and users become the rights holders of subscribed debts based on the framework of debt assignment under Article 294 and Article 350 of the Civil Code. To protect the rights and interests of users, Bitopro's debt has a 'buyback clause' to ensure that users can ultimately receive the agreed interest and principal. In addition, the income from Bitopro's debt comes from the transaction fees subscribed by users, and not from using users' funds to invest in Decentralized Finance for profit.

Virtual Asset Special Act: Clearly Regulate Market Behavior

Regarding the future direction of encryption currency regulation, Peng Jinlong stated that the Virtual Asset Special Act will cover various aspects such as trading regulations, institutional management, consumer protection, and is committed to ensuring the rights and interests of investors. He emphasized that legal trading behavior must comply with regulations, and the goal of the special act is to allow the development of emerging financial technology on a legal and compliant basis.

Lai Shih-pao emphasized at the end that the public has high expectations for the FSC and believes that the FSC should take responsibility for any industry involving fund transactions. Peng Chin-lung responded that not all fund transactions fall under the jurisdiction of the FSC, but will strengthen cooperation with other departments to ensure the stable operation of the market.

【Disclaimer】There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. The responsibility for investment lies with the user.

This article is authorized for reprint from: 'Chain News'

'Lai Shibo criticizes USDT financial management suspicion of fund raising! FSC: Will discuss the regulation of Decentralized Finance, how do operators see it' This article was first published in 'encryption city'