Environmental analysis of the blockchain ecosystem in Taiwan
The aim of this analysis is to illustrate the current state of the blockchain ecosystem in Taiwan. Therefore, it provides a snapshot of the rapidly evolving Taiwanese offerings, which focus on the usage of the blockchain technology. This analysis only covers the main companies or projects in Taiwan related to the crypto market and there are quite a lot of good projects under the radar as well.
The Author tried to include as much projects as possible, however it is thought to find detailed information, especially for those projects, which only offer information in Chinese. Please note, that the Taiwanese blockchain ecosystem is way bigger than the scope of this report. The author doesn’t have any affiliation with the companies at the time of publishing and unfortunately doesn’t get paid for his work. Hence, this report is 100 percent independent.
Contents:
1.Government & Legal framework
1.1 The Sandbox Act
1.2 ICO Framework to be issued by June 2019
1.3 Special economic zone in New Taipei city
1.4 Regulatory bodies for blockchain adoption
2. Crypto companies in Taiwan
2.1 Wallet Providers
2.2 Financial service provider
2.3 Consulting
2.4 IoT
2.5 Media
2.6 Exchanges
2.7 Content and social media platforms
2.8 Blockchain Software & Infrastructure
2.9 Intellectual property
2.10 Others
3. Community
3.1 Events
3.2 Adoption
3.3 Blockchain accelerators and venues
3.4 Podcasts
4. Conclusion
1. Government & Legal framework
In the early days of Bitcoin, the Taiwanese law makers weren’t so supportive, however that changed in recent years. In 2017 Wellington Koo the chairman of the financial supervisory commission (FSC) in Taiwan stated that they leave space open for the development of cryptocurrencies and distributed ledger technology. Furthermore, he added that the development of distributed ledgers and blockchains represents a huge opportunity for innovation and economic growth for Taiwan. Source: The Newslens
1.1 The Sandbox Act
In December 2017 the Act on Financial Technology Innovations and Experiments (金融科技創新實驗條例) was passed. This is a regulatory sandbox for fintech companies, which grants more room to move while experimenting with innovative financial services.
The act increases the flexibility of financial-oriented regulations that have been limiting innovation, while also breaking down barriers between sectors, so that tech and financial firms can work together seamlessly. Source: Taipei Times
According to the Crypto Congressman Jason Hsu the Regulatory Sandbox bill has two unique characteristics: ()
1. The world’s longest testing period: the new legislation allows 3 years maximum testing period ; one-year basic duration with 4 extensions for 6 months each.
2. Banks and start-ups can file joint applications to be considered for entry into sandbox. This can lower frictions that might have caused otherwise during implementations. Banks will be encouraged to incorporate fintech products and services into their operations.
Prior to the sandbox environment a company or individual carrying out an ICO had to consider four main pieces of legislation that affect the operation of a cryptocurrency or the launch of an ICO in Taiwan. These are the Criminal Code, the Banking Act, the Securities Exchange Act and the Money Laundering Control Act. Each act has certain provisions and requirements that require strict compliance and attention. The acceptance of applicants has a wide threshold on the definition of who the applicant may be. According to Article 4.1 of the Sandbox Act, “domestic and foreign natural persons, juridical persons, a sole proprietorship, and partnerships may apply for the authority’s permission to launch into the Fintech Sandbox.”
Source: Zhong Yin Law Firm, Partner Charlotte Wu / Associate Arthas Ke
The applicant must not only provide a decent number of documents, but also clearly illustrate proof of innovation, the business model and funding resources to the FSC. Furthermore, the proposed project timeline, scale, and the scope of the business model must be submitted. The FSC then takes a maximum of 60 days to evaluate and decide if the application is successful. The evaluation criteria are also determined in the Sandbox Act. Unfortunately, a statistic of how many companies currently participate in the program is not available on part of the FSC.
The recent changes concerning the Anti-money-laundering (AML) policies in November 2018 imply that the legislative bodies of Taiwan are determined to adjust their law to comply with international standards while providing regulations for crypto companies. As stated by Jason Hsu a regional consensus between Taiwan, Japan, Korea, Singapore, Hong Kong and other regional players for guidelines regarding parameters for exchanges and taxation will be announced in the coming weeks.
1.2 ICO Framework to be issued by June 2019
As reported by the Taipei Times on 2018/10/23 the FSC plans to issue detailed regulations regarding Initial Coin Offerings. FSC Chairman Wellington Koo (顧立雄) stated its aim to make virtual tokens as easy to invest in as stocks and just as liquid. If the token issued through an ICO functions similar to a security, the commission would define it as a “securities token” and therefore it would be subject to the Securities and Exchange Act (證交法) according to the Securities and Futures Bureau Deputy Director-General Tsai Li-ling (蔡麗玲). The issuer would also need to disclose information, which are similar to those which are demanded from companies, which are publicly traded. Due to the lack of clear definition, cases of ICOs that involve illegal fundraising activities or fraud are currently evaluated by the commission case-by-case.
1.3 Special economic zone in New Taipei city
In an Interview with The Newslens Jason Hsu stated:
“When I run for re-election next year, I want to develop a blockchain district or zone in Taipei that can experiment with ideas, perhaps the district I represent, where some kind of community coin can be issued that will allow entrepreneurs to reap the benefits of the token economy”.
The zone will have a size of around 12.000 square meter and aims to attract more than 200 global start-ups as well as different funds and venture capital firms. To give the development a quick start an ignition fund of 100 Million NTD (2,86 Million Euro) is planned. Furthermore, he envisions an area where one can use crypto in retail shops to buy daily groceries, which offer a traceable and transparent supply chain for the consumer. Of course, enabled through distributed ledger technologies. The zone will also address the topic of user education in order to archive a mass adoption as soon as possible. Furthermore, it will have a waiver within the zone to develop virtual real estate projects.
Should Jason Hsu be successful in his upcoming elections the lights are all green for crypto companies and enthusiast in Taiwan. You can find out more about him and his vision here or at his twitter or LinkedIn account. Jason is the leading voice for the adoption of a supportive legal framework for the crypto industry in Taiwan. So, make sure to follow him.
1.4 Regulatory bodies for blockchain adoption
The Taiwan Parliamentary Coalition for Blockchain (TPCB) aims to unite various Taiwanese political factions under the banner of a better-defined regulatory framework that will help spur the growth of blockchain technology.
To increase the pace of innovation the community founded the Self-Regulatory Organisation (SRO), which nearly has 100 members, comprising all the major players who maintain a presence in the market.
2. Crypto companies in Taiwan:
2.1 Wallet Providers
CoolBitX: The Hardware wallet Cool Wallet S launched in 2016. It is a hardware wallet with the size and physical characteristics of a credit card. It connects to a smartphone (iOS or Android) via an encrypted Bluetooth connection.
HTC Exodus: HTC just shipped the first blockchain phone. The Exodus 1 uses a secure enclave to protect crypto users from external threats. The Zion Wallet also introduces the social key recovery, which is a new way to backup one’s crypto assets.
2.2 Financial service providers
Formosa Financial aims to act as a connector for financial products between traditional banks and the crypto community. They offer innovators vital tools to hedge their exposure to crypto markets, while also providing access to a deep pool of liquidity.
Green World Fintech Services issued a stablecoin pegged to the New Taiwan Dollar (NTD). The Taiwan Digital Token (TWDT) is based on the Ethereum Network and uses the ERC20 standard. Green World is also the owner of the EC Pay network, which is one of the top three electronic payment processors in Taiwan.
The aim of AMIS is to ensure information security and regulatory compliance in financial clearing and settlement. They want to bring transparency to financial clearing and settlement networks. Amis is a founding member of the Enterprise Ethereum Alliance.
Tixguru is a digital asset management ecosystem. Tixguru makes it easy for anyone to get exposure to crypto returns with broad, diversified risk. Holder of the TIX token can access the platforms investment tools.
Bytepay provides merchants a platform to accept a variety of digital coins and tokens as payment. The custodial service facilitates crypto to fiat exchange and even takes the risk of fluctuating prices for some currencies.
Leadbest is a decentralized Application, which facilitates the fundraising and token distribution process for investors. Currently, it focuses on solving the need from pre- to post- investment for STOs and TAOs.
Coin Master offers a portfolio manager. It enables the monitoring and managing of your blockchain assets.
2.3 Consulting
Blockcamp helps tech companies build their strategy, company branding (design) and PR/events.
Zhong Yin Law Firm has provided legal services to more than 3000 Chinese companies. They mainly operate in mainland China, but also have expertise concerning the Taiwanese ICO framework.
Bit Raise: ICO consultancy
2.4 IoT
ioeX creates a decentralized and distributed network that allows AI equipment to transmit data without a storage and transmission center.
Biilabs enables the communication for smart products to the different players within its industry. It provides a communication protocol between the devices and the IOTA direct acyclic graph (DAG) via its own distributed ledger. Resources like computer storage and computational power can also use this protocol.
Twoiot addresses the ubiquitous problem of waste management. They developed a device to gain data with the aim to increase the efficiency within the value chain of waste management. They use the IOTA protocol to store data about the real-time fill levels of waste bins.
IOTA Foundation & Taipei Smart City
The first project to be implemented within the partnership will be the introduction of digital citizen cards with built-in TangleID. The concept of these cards was designed with the aim to decrease risks of identity theft and voter fraud. Simultaneously, the digital cards will represent a simple tool for tracking health history and other data for public services. In addition to that, the existing IoT Airbox infrastructure, which measures temperature, humidity, light and pollution will use the tangle to provide real-time data. The IOTA protocol incentives data providers to share their insights on a data marketplace in cooperation with Biilabs. The partnership was made public in February 2018.
2.5 Media
Block Trend is a subscription-based news platform created by Xu Mingen. He is a master’s degree student of the Institute of Electronics in Taiwan and provides comprehensive content covering numerous topics of the crypto industry. Only available in Chinese.
Taiwan also has a dedicated news platform for the blockchain ecosystem called Blocktempo. Unfortunately, the website offers its content only in Chinese.
Other Media outlets: (Chinese Only)
Zombit, Bitnewstw, blockcast and blocktimes.
2.6 Exchanges
BitoPro is developed by the BitoEX team, who started BitoEX in 2014 and provide cryptocurrency solutions such as a web wallet, business applications, financial auditing and more. According to their website they have more than 200.000 unique members and cooperate with over 3.000 convenience stores. BitoPro also supports the trading of the Taiwanese stable coin TWDT.
Max digital asset exchange offers fiat-to-crypto and crypto-crypto markets. They offer an app for iOS and Android. The exchange also has its own token. Holding the MAX token enables you to join their “Fee Reward” or “Holding & Staking” mechanism to obtain more MAX Tokens. In the future they will enable trading fee discounts and other advanced services such as faster withdrawals, higher trading limits, market commentary and more.
Joyso is a hybrid decentralized exchange. This means, that your deposited funds are managed by a smart contract on the blockchain itself instead of a centralized server of a trusted third party, which makes it a decentralized exchange. The hybrid originates from the “smart match” function, which efficiently matches one order to many (1-m). Only the orderbook and the matching is done off-chain in a centralized manner. The Dapp already supports major mobile and hardware wallets like Ledger, Trezor and the CoolWallet.
The well-known exchange Cobinhood is registered in the Cayman Islands but its operational headquarter is in Taipei. Its founder Popo Chen is from Taiwan and the platform also got financial support from major Taiwanese banks. The platform provides spot trading and margin trading. Additionally, it also provides ICO services to solve ICO token liquidity issues.
Others:
OTCBTC: Provides an over-the-counter (OTC) service
STAR BIT EX: 0x- based decentralized exchange
Bitpoint-tw: Custodial exchange service
2.7 Content and social media platforms
The content ecosystem Contentos addresses the issues of current content platforms, which fail to reward their users in a transparent and fair way. They not only use an own coin for a decentralized revenue system, but also provide solutions for copyright authentication and a credit score.
Gifto is an Ethereum based dapp, which allows the creation of virtual assets, which are both immutable and independent of any particular platform. Rather than relying on advertising, content producers receive gifts directly from their fans through virtual gifting. Gifto is part of UPlive, which is one of the biggest live streaming platforms globally.
The Ethereum based social media platform Mithril can be integrated into new and existing social media networks to reward content creators for contributions to the network via the Mithril (MITH) utility token. The operational app PiePie already allows users to earn tokens by creating content.
2.8 Blockchain Software & Infrastructure
Unitychain provides a general purpose public blockchain with the primary goal of providing a storage layer for records, which should be everlasting. It aims to offer a purpose build consensus protocol, which promises to lead to greater democratization of blockchain participation, without sacrificing scalability and security.
Bacon Chain also Provides a Blockchain as a Service (BaaS) solution. They also have their own token, wallet service, APIs and rewarding platform called social cloud mining.
Cartesi is a blockchain based infrastructure layer for computationally intensive tasks, which involve massive amounts of data. Cartesi provides a security solution to assure that the outcome of the computation can be trusted.
Other: Dexon
2.9 Intellectual property
Muzeum is a public-domain database for the creative industry. It provides a decentralized copyright tracking framework for readers, creators, copyright owners, brokers, distribution companies and other cultural and creative industry stakeholders.
The digital ownership registry Bitmark leverages blockchain to provide solutions for individuals to take ownership of their digital assets. Their tools allow you to record, track, and trade the property rights to your digital assets and data. Each property can be transferred independently, giving it a unique ownership history that can be authenticated by anyone.
2.10 Others
Morpheus network is a full-service, global, automated supply chain platform with an integrated cryptocurrency payment system. The company is headquartered in Taichung and former DHL CEO Roger Crook is part of the executive team.
Owlting has a variety of different offerings. They offer mobile commerce, map applications, SCM and travel solutions enabled via the blockchain technology. Softbank is one of Owlting’s investors. The financial times recently published a video about Owlting.
Poseidon is a decentralized content delivery platform which currently incubated in the Asian Blockchain accelerator.
Personal healthcare record operating system (phrOS):
Taipei Medical University Hospital and Digital Treasury Corporation (DTCO) work on phrOS, which will enable a patient-centric healthcare system, where an individual can carry their own medical information.
Pointree is a rewarding platform with its own utility token. Buyers can acquire these tokens similar to loyalty points and can use it within the Pointree ecosystem.
Selftoken: Entertainment ecosystem
Ubitus: Cloud as a Service
3. Community
All communities of major projects have a representation in Taiwan. From Bitcoin, Ethereum, EOS, NEM, NEO and much more. If you search for it, you will find an event or a community in which you can prosper.
3.1 Events
When considering the whole country, Taipei certainly is the central hub for the blockchain developments. There are some gatherings in Taichung or Kaohsiung as well, however the main events are all located in Taipei. From big industry conventions, accelerator demo days to small meetups in cozy bars — Taipei has everything. This is the major upcoming event in Taipei:
World blockchain Summit Taipei
The biggest upcoming event in the space is scheduled for 25–26 April 2019. It is a global series of gatherings for the crypto industry that take place in 15+ destinations across the world.
Taipei also hosted the first NEM Hackathon as well as the first Ethereum sharding meetup. Furthermore, the first “Initial Ticket Offering” (ITO) was conducted in Taiwan by the Blockcity fintech event. The Taiwan Blockchain Week, which was hosted in Taipei in 2018 attracted over 2.000 people from around the world.
3.2 Adoption
Buy Bitcoin everywhere
All major convenience store chains such as 7–11, Family Mart, OK Mart and Hi-life offer the direct purchase since 2016. Hence, you can buy crypto at an overwhelming 3.000+ stores on the island. The stores collaborate with Taiwanese Exchanges BitoEx and Maicoin.
Family mart was restricted to provide this option due to the lacking KYC procedures. After Jason Hsu set up a meeting between the FSC and the exchanges these problems were fixed. The service is now available again. However, bitcoin buyers now need a passport or an ID to acquire the cryptocurrency.
Personally, I recommend you to go to Family Mart and use their FamiPort, which is straight forward and well explained in this article.
Real world usage
Taiwan was the host of the first major festival, which used blockchain for onsite transactions. The blockchain payment provider Pundi X and the electronic music festival Ultra collaborated to facilitate the payment process for the 30.000 visitors.
Low ICO participation
According to the blockchain data visualizer Elementus, the Taiwanese ICO participation just accounts for 13,620,000 US$.
3.3 Blockchain accelerators and venues
Appworks
If you just started your own crypto business and look for a six-month acceleration? Then join the Appworks accelerator. They provide mentorship, resources and facilities as well as a network of experienced advisors, investors and like-minded founders. The current batch addresses blockchain and AI start-ups in particular. They don’t charge you any money or demand a share of the company. Hence, it’s a pure win for you and your idea!
Asia Blockchain Accelerator (ABA)
The government backed ABA aims to create over 1 billion NTD (27,8 million €) of business value in two years and support the attractivity of Taiwan as a blockchain center in Asia. Among many well-known companies it also has a strategic partnership with Gifto, which provides the accelerator and its start-ups with experienced advisors. The first project to be incubated is the Poseidon Network, which is a decentralized content delivery network.
Venues you should pay a visit:
Bithub, Bitzantin and the FinTechSpace
Taiwan Tech arena: Includes the accelerators: SparkLabs, InnoVex and MOX,
3.4 Podcasts
If you want to know more about the Taiwanese crypto community, I can recommend you these two podcasts:
Crypto 101 and Fomo Daily
4. Conclusion
Within this section I want to summarize the ecosystem and illustrate the opportunities and challenges for the nascent crypto industry in Taiwan.
First, I want to explain why Taiwan is in an excellent position to play an elemental part in the future development of the industry. The Country already has a decent financial sector and an emerging market of different players within the blockchain ecosystem. Out of the 20 founding members of the Ethereum Enterprise Alliance five are from Taiwan. As stated by Dr. Buterin in 2016 he had the most high-quality audience so far at an Ethereum developer workshop in Taiwan.
An additional strategic advantage is the skilled and comparable cheap labor force. Taiwan is known for its outstanding engineering talents. There is a reason why Google, Microsoft and other global players established major engineering and R&D facilities in Taiwan. The case of Google is especially noteworthy. The company acquired a substantial part of HTC’s smartphone design team of about 2.000 engineers in early 2018, which makes it Googles biggest engineering hub outside the United States. The fact that one of AlphaGo’s lead developer Aja Huang is a Taiwanese native, as well as Tung-Kung Liu, the second in an AI researcher and influencer ranking demonstrates the engineering capabilities of its workforce.
Another key aspect is the small size of the economy, which can be a perk to execute regulatory changes in a fast manner. With the high-tech industry representing one of the biggest industries in Taiwan, it can successfully leverage its position to adjust regulatory requirements or get rid of existing obstacles. The open support of the government and the establishment of the self-regulatory organisation are key requirements and will further increase the speed of adoption and attractiveness of Taipei as crypto-hub in Asia.
The global players, which are headquartered in Taiwan also play a key role for the crypto industry. TSMC, which is expected to dethrone Intel within the semiconductor industry also profited from the risen demand of mining equipment. As examples like Shenzhen thought us, whole industries are going to develop near the supply chain. So, we might witness the emergence of a booming scene of mining companies anytime soon. And there also is HTC, which just started to ship the HTC Exodus this month. This not only illustrates that HTC is still committed to the manufacturing of smartphones, but also sets a statement for their drive for innovation. According to Phil Chen the decentralized chief officer of the Exodus team, crypto represents one of the top priorities of the company after 5G and AR/VR.
Nevertheless, there are quite a few points, which represent room for improvement. Most important is regulation. According to people familiar with the matter, the self-regulatory organisation has split into several groups. A high level of integrity of the bodies included into the legislature process is necessary for a fast and streamlined process. The announcement of an ICO/STO framework in 2019 is a good start, however it remains to be seen in which dept the law fits to the needs of the crypto market. A new level of comprehensiveness is necessary to cope with the plurality of legal challenges. Furthermore, the Taiwanese legislatures requires a solution for Chinese pump and dump schemes. BitBitDuo is one of these cases, in which Chinese capital management companies ripped off Taiwanese investors.
When considering the Taiwanese blockchain start-ups, the explanation of the offered service can be improved. A clear formulated value proposition is necessary to illustrate the unique advantage of the product for the user. In some cases, it still sounds like a buzzword bingo. The poor usage of the English language makes it ever harder to understand certain offerings. However, this only accounts for a minority of projects. Here we can identify a market opportunity for marketing and consulting companies, which are specialized on the emerging market of decentralized economies.
To conclude this report, it can be said that Taiwan is well positioned to emerge as a blockchain hub within the region. Once the current parts of financial uncertainties are replaced by a solid framework for token offerings the economy around the technology is set to boom. Additionally, the government may consider the subsidizing of key use cases in which the country already is a leading force or is in a good spot to be one. This includes IoT devices and applications, (decentralized) exchanges and software infrastructure.
Since the crypto industry still has a considerable growth potential it’s not necessarily bad to be late to the game. But it is important to have a sound and supportive law in place before the bulls prepare their next run.
Note: Blocktimes recently published an industry map as well.
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