Taiwan's participation in Virtual Money is only 5%! Lin Zhichen: The Web3 track is wide and opportunities are limitless.

Stablecoins and the wave of virtual assets are coming. The Federal Reserve (FED) of the United States has recently included digital assets and stablecoins in the official meeting agenda for the first time, with crypto world participants viewing it as a barometer for future policy development directions. Lin Zhichen, General Manager of Taiwan Mobile and Chairman of Fusheng Digital, pointed out that currently about 5% of the population in Taiwan has come into contact with virtual money, and the number of people participating in virtual asset investments is also continuing to grow, indicating that the market still has great potential.

The Federal Reserve (FED) agenda, Taiwan Virtual Money policy shift

The Federal Reserve recently held its first payment innovation conference, gathering global leaders from finance and technology. The conference focused on four topics: the integration of traditional finance and digital assets, business models of stablecoins, the application of AI in payments, and tokenized products. People from the crypto world stated that this not only symbolizes a key turning point in the U.S. central bank's attitude towards digital assets but is also likely to become an important bellwether for countries around the world when discussing policies related to tokenized payments and the application of stablecoins.

The historical significance of this meeting lies in the fact that the Federal Reserve has officially included digital assets and stablecoins on its agenda for the first time, rather than merely mentioning them in regulatory warnings or risk assessments. This shift in attitude indicates that central banks are beginning to take the possibility of digital assets as part of financial infrastructure seriously. For Taiwan's Virtual Money market, the policy direction of the United States is of significant reference value, as Taiwan's financial regulation often refers to practices in the United States.

The market is also highly concerned about whether Taiwan will launch a New Taiwan Dollar stablecoin, further strengthening its role in the global financial arena. Lin Zhichen is optimistic that in the future, financial operators in Taiwan are expected to issue stablecoins, with one to two qualified operators anticipated. He stated that there are two or three well-known stablecoins globally, and the one that can establish an ecosystem to serve the most users will become the more mainstream stablecoin. After the specialized law is passed, a free market competition should be seen in the next five to ten years, and ultimately there should be one to two stablecoins, most likely one.

Speaking of stablecoins, Lin Zhichen stated that the development of stablecoins is not only a technological innovation but also an extension of the financial trust system. Han Kunju, Vice President of Web3 Business at Taiwan's major company and General Manager of Fu Sheng Digital, pointed out that stablecoins have moved from the virtual asset market to the real economy, with some people in certain regions using stablecoins to combat the depreciation of their local currency for daily consumption, demonstrating the enormous potential in the actual payment field. In cross-border fund transfers, stablecoins are reshaping the international capital circulation model with their high efficiency and low cost advantages.

Taiwan Virtual Money Penetration Rate 5%, TWEX Opens Middle-aged Market

Lin Zhichen, General Manager of Taiwan Mobile and Chairman of Fusheng Digital, pointed out that although blockchain has experienced market fluctuations, the pace of industry development has never stopped. Currently, about 5% of the Taiwanese population is in contact with Virtual Money, and the number of people participating in Virtual Money investment is also continuously growing, indicating that the market still has great potential. In addition, he emphasized that the global Web3 user base may still be less than 5%, and the industry racecourse is still quite spacious, providing everyone with competitive opportunities.

A penetration rate of 5% in the investment sector is considered an early stage. By referring to the stock market, Taiwan has more than 12 million stock accounts, accounting for about 50% of the total population. If Taiwan's Virtual Money can achieve a similar level of popularity, there is still a 10-fold growth potential in market size. Of course, the risk characteristics of virtual assets determine that it is unlikely to reach the popularity of the stock market, but even achieving a penetration rate of 10% to 20% would mean the market size would double to quadruple.

Taiwan Mobile is making a big move into the virtual asset business and established the Taiwan Mobile Virtual Asset Exchange (TWEX) in May. Taiwan Mobile's General Manager, Lin Zhi-Chen, stated that more virtual asset services will be launched next year. Taiwan aims to become the asset management center of Asia, and virtual assets, including Bitcoin, should be included as one of the wealth management options for investors. Taiwan Mobile established a wholly-owned subsidiary, Fusheng Digital, to operate TWEX, with Lin Zhi-Chen also serving as Chairman.

He pointed out that compared to online-native virtual asset exchanges, the clientele is mostly in the 20 to 29-year-old young demographic, while TWEX's user profile is more concentrated in the 40 to 49 age group, highlighting that TWEX attracts investors who are interested but unsure how to enter the Taiwanese Virtual Money market. This difference in user profiles is strategically significant. The 40 to 49 age group typically has stronger financial capabilities and more mature investment experience, with their average investment amount being far higher than that of those in their 20s.

Lin Zhichen said that TWEX has a trusted foundation to lead investors in, opening up new markets instead of competing with existing exchanges. After nearly half a year of operation, the development situation is better than he expected. As a publicly listed company and a telecommunications leader, Taiwan Da's brand trustworthiness has brought in a new user base for Taiwan's Virtual Money market. Many middle-aged investors are interested in crypto world, but are hesitant to use unfamiliar overseas exchanges. TWEX provides an entrance they trust.

He stated that the Financial Supervisory Commission is promoting the “Virtual Asset Service Act,” which has been submitted to the Executive Yuan. Taiwan's TWEX has also become one of the first nine virtual asset trading operators to pass the review. Currently, it only sells Bitcoin and Ethereum, mainly because TWEX is a new entrant and has initially imposed self-limitations. Once the specialized law is passed in the future, it will definitely launch more services, including expanding into overseas markets, serving overseas investors, and allowing more virtual digital products to be traded on the platform, such as blue-chip cryptocurrencies, as well as regular fixed-amount purchases. Non-TWEX users or institutional clients will also be able to open accounts to participate.

Three Major Opportunities in Taiwan's Virtual Money Market:

Low penetration rate: A 5% participation means that 95% of the potential market is yet to be developed.

Middle-aged Market: High net worth individuals aged 40-49 begin to enter the market, with an even higher average investment amount.

The Special Law is About to be Passed: With a clear regulatory framework, the confidence of institutions and conservative investors is increasing.

Secondary market VASP operators are the key to stablecoin applications

Yang Yueping, an associate professor at National Taiwan University Law School, stated that the current discussions about stablecoins are mostly focused on the issuance side, that is, who is qualified to issue stablecoins. However, the key factor that truly affects the application scenarios and liquidity of stablecoins lies in the virtual asset service providers (VASP) in the secondary market. He emphasized that only through these VASP operators assisting users in transfers within the secondary market can stablecoins truly operate and become payment tools. In the future, Taiwan must also explore the relationship between domestic and foreign stablecoins.

This perspective is profoundly insightful, revealing the complete landscape of the stablecoin ecosystem. Issuing stablecoins is just the first step; without circulation channels and application scenarios, even the best stablecoins cannot function effectively. VASP (Virtual Asset Service Provider) operators include exchanges, payment service providers, custodians, etc., and they serve as the bridge connecting issuers and end users.

The VASP operators in Taiwan's Virtual Money market are rapidly developing. In addition to Taiwan's major TWEX, there are local operators such as MAX exchange and ACE exchange under the MaiCoin Group, as well as international platforms like Binance. After the passage of the “Virtual Asset Service Act”, these operators will operate within a compliance framework, providing users with safer services.

Yang Yueping emphasized that the relationship between domestic and foreign stablecoins is a complex but critical issue. If Taiwan issues a New Taiwan Dollar stablecoin, how will it compete with international mainstream stablecoins like USDT and USDC? Will the application scenarios for the New Taiwan Dollar stablecoin primarily be domestic in Taiwan, or will it aim for internationalization? The answers to these questions will determine the development direction of Taiwan's Virtual Money market.

Lin Zhichen emphasized that global funds have begun to flow into virtual assets based on Web3 technology. However, whether in Taiwan or the global market, participants in Web3 virtual asset investment currently account for at most 5%. The track is wide, and Taiwan has the ambition to become an Asian asset management center, which should also increase virtual asset options, allowing investors to include them in asset allocation and attract investment capital. Lin Zhichen also revealed that the service area of Taiwan may expand to markets outside of Taiwan in the future, hoping to “provide the right service at the right time.”

For participants in Taiwan's Virtual Money market, this is a stage full of opportunities but also requires caution. The gradual improvement of the regulatory framework, the entry of mainstream companies, and the enhancement of user education are all positive factors. However, it is also important to recognize that virtual assets still represent high-risk investments, with significant market volatility and rapid changes in technology and policy. Only by fully understanding the risks, making proper asset allocation, and choosing compliant platforms can one achieve returns in this emerging market.

Taiwan's ambition to become an asset management center in Asia requires multi-faceted cooperation. The openness of financial regulations, the construction of technological infrastructure, the cultivation of talent, and alignment with international markets are all necessary conditions. Although Taiwan's virtual money market started relatively late, if it can effectively leverage its technological advantages and manufacturing base, it still has the potential to secure a place in this global competition.