Crypto KOLs "leading trades" crossing the red line! The Financial Supervisory Commission will regulate them: relying on the Financial Asset Management Act and its subordinate regulations for oversight

Author: Fenrir, Crypto City

Preventing Pump-and-Dump Chaos: Financial Supervisory Commission Plans to Use Subordinate Laws under the Financial Consumer Protection Act to Strengthen Regulation
As cryptocurrency investment enthusiasm continues to rise in Taiwan, a large number of so-called “crypto teachers” (KOLs) have emerged in the market. They form groups on social media platforms to teach, promote, or give investment advice. These “pump-and-dump” behaviors involve influencing market prices and misleading investors, drawing high attention from regulatory authorities.

Source: Legislative Yuan | KMT Legislator Li Yanshou Calls for Clear Regulation of Pump-and-Dump Phenomena in Crypto Space

Recently, during a financial committee inquiry, KMT legislator Li Yanshou pointed out that although current regulations prohibit manipulative activities aimed at influencing prices, the market is still flooded with behaviors that essentially provide investment advice. He urged the Financial Supervisory Commission (FSC) to clarify regulation.
FSC Chair Peng Jinlong responded that, in the future, they plan to use the authority granted by the “Financial Consumer Protection Act” subordinate laws to regulate advertising, solicitation, and promotional activities conducted by financial service providers through KOLs, aiming to establish an orderly virtual asset market.
Peng Jinlong emphasized that similar behaviors are already regulated in traditional financial markets, and influencers promoting financial products must adhere to specific restrictions. Currently, the focus of regulation is on bringing virtual asset analysis and advisory activities under management to ensure investors receive adequate protection when accessing information.
According to FSC plans, future measures will reference self-regulatory mechanisms used in traditional financial markets for fund and advisory firms collaborating with online influencers. Virtual asset service providers (VASPs) may be required to sign formal cooperation agreements with KOLs and incorporate these into their internal control systems. This means that in the future, crypto teachers who want to publicly promote or offer pump-and-dump services must operate within a compliant framework and cannot continue to operate in regulatory vacuum.

Source: Legislative Yuan | Peng Jinlong emphasizes that similar behaviors are already regulated in traditional financial markets, and influencer promotion of financial products must be restricted

Where is the Red Line? Risks of Illegal Solicitation Seen in Cases of Crypto Influencers and BitMart
Recently, several cases have clarified the regulatory red line. Previously, well-known crypto influencer “Crypto Hu Shi” and his company Yang Ji Co., Ltd., were warned by the Securities and Futures Institute for failing to register under the “Anti-Money Laundering Registration Measures for Virtual Asset Service Providers” and for not submitting AML compliance declarations to the FSC.
This notice explicitly prohibits their solicitation activities related to virtual currencies and marks the first time a KOL has been officially named under the virtual asset registration system. Although Crypto Hu Shi later claimed that the industry association had no legal authority, FSC legal personnel pointed out that operators who have not registered but engage in platform business activities, including solicitation, are already crossing legal boundaries—especially when these activities are viewed as extensions of exchange operations, which carry high legal risks.
Further reading: Running Fake Trading Report Generators to Scam Investors! Is “Crypto Hu Shi” Crossing Legal Boundaries?
Another notable case involves the offshore exchange BitMart. The FSC’s Securities and Futures Bureau officially designated the platform as an unapproved operator and specifically mentioned that certain KOLs on the Threads social platform recruited “trading teams” using invitation codes. The bureau clearly stated that BitMart has not completed AML registration and is prohibited from providing services or advertising in Taiwan.
The FSC reminds the public to refuse unapproved offshore platforms and avoid transferring funds to related accounts. These cases show that whether it’s individual KOLs or foreign exchanges, any illegal solicitation targeting Taiwanese investors will be subject to official naming, warnings, and possibly criminal investigations.

Unveiling the Fake Performance of Report Generators: Investors Must Beware of False Results and Investment Traps
Additionally, during bullish market conditions, scammers often exploit investors’ FOMO (Fear of Missing Out) by using sophisticated tools to create illusions. The crypto space has long seen the rise of “report screenshot generators,” which, by inputting the coin type, leverage, opening price, and name, can generate seemingly impressive profit statements with a single click.
These “fake teachers” typically create groups on Facebook, Instagram, LINE, or Telegram, using fake accounts and conversations to foster an atmosphere of earning big money with their guidance. Their tactics often start with free trial trades, allowing investors to make small profits initially to build trust, then demanding larger transfers to fake wallets or unknown exchanges. Once funds are transferred, the teachers and groups vanish overnight, leaving investors with losses.
Beyond technical fakes, these pump-and-dump groups often promote “arbitrage formulas” or “professional training” to attract followers. For example, some KOLs on Threads claim that with just 1,000 USDT, they can generate hundreds of thousands of USDT in trading volume, emphasizing that all techniques are taught by the teacher and students can copy them.
However, these overly promising profit guarantees and requests for specific offshore platform invitation codes pose significant compliance and security risks. The FSC and police repeatedly remind that crypto investments should not rely blindly on word-of-mouth within groups. Any “teacher” asking for private transfers or directing investors to unregulated platforms is highly risky. Genuine market participants should develop independent risk awareness rather than be blinded by false profit screenshots.

Regulatory Implementation and Practical Challenges: VASP Special Laws and Self-Regulation as Future Keys
Currently, Taiwan’s regulation of crypto KOLs is at a critical turning point.
In legislative proposals, the Taiwan People’s Party has explicitly recommended regulating key opinion leaders (KOLs). The draft “Virtual Asset Service Provider Act” requires VASPs to disclose company names and licenses in advertising and marketing, prohibit false or misleading promotions, and stipulate that KOLs must meet certain qualification criteria.

Source: Legislative Yuan | Taiwan People’s Party Draft “Virtual Asset Service Provider Act” requires VASPs to disclose company and license info in advertising, prohibit false or misleading promotions

However, industry insiders admit that requiring all KOLs to have specific financial qualifications is highly challenging.
A more practical compromise is to follow the model of the Fund and Advisory Association, where operators periodically review and regulate their partnered influencers through contractual obligations to ensure compliance.
This regulatory effort against “crypto teachers” is part of Taiwan’s overall draft of the “Virtual Asset Service Provider Act.” As the VASP registration system is gradually implemented, regulations on pump-and-dump behaviors will fill a crucial gap in the supervisory framework.
Currently, the following VASPs are authorized to provide services in Taiwan, listed alphabetically:

• HOYA Digital Technology (HOYA BIT)
• Pioneering Digital Technology (ZONE Wallet)
• Modern Wealth Technology (MaiCoin, MAX Exchange)
• KryptoGO (Weight Technology)
• Fusheng Digital Technology (TWEX)
• Cross-Chain Technology (Chainss)
• BitoPro (BitoPro)
• XREX Inc. (XREX Exchange)

FSC Chair Peng Jinlong stated that the government’s draft law will be prioritized, with guidelines for custody to be established within six months. Investors should prioritize using legally registered platforms and remain vigilant against unlicensed solicitation activities to protect their rights under the law.