Crypto circle KOLs "lead trades" crossing the red line! The Financial Supervisory Commission wants to regulate: relying on the Financial Consumer Protection Act for legal specifications.

Author: Fenrir, Cryptocurrency City

Eliminating the chaos of signal trading, the Financial Supervisory Commission plans to use the authorization of the Financial Consumer Protection Act to strengthen regulation As the investment enthusiasm for cryptocurrencies continues to rise in Taiwan, a large number of individuals claiming to be “crypto mentors” have emerged in the market, forming signal trading groups on social media platforms to provide teaching calls or investment advice. Such “signal trading” activities involve influencing market prices and misleading investors, raising significant concerns from regulatory authorities.

Source: Legislative Yuan | KMT legislator Li Yanxiu demands that the Financial Supervisory Commission clearly regulate the chaos of signal trading in the crypto industry.

Recently, KMT legislator Li Yanxiu pointed out during a Finance Committee inquiry that while existing regulations prohibit operations intended to influence prices, the market is flooded with activities that essentially provide investment advice, calling for the Financial Supervisory Commission to clearly regulate this. Chairman of the Financial Supervisory Commission, Peng Jinlong, stated that in the future, they plan to regulate behaviors such as advertising, solicitation, and promotional activities conducted by KOLs in the financial services industry through the authorization of the Financial Consumer Protection Act, aiming to establish an orderly virtual asset market. Peng Jinlong emphasized that similar behaviors are already regulated in traditional financial markets, where influencers promoting financial products must be subject to specific restrictions. The current regulatory focus is on incorporating virtual asset analysis and advisory activities into the management scope to ensure that investors receive adequate protection when accessing information. According to the Financial Supervisory Commission’s plan, they will refer to the self-regulatory mechanisms of traditional financial markets regarding investment trust and advisory businesses collaborating with influencers, and may require virtual asset service providers (VASP) to sign formal cooperation contracts with KOLs and incorporate them into the internal control systems of the businesses. This means that in the future, if crypto mentors want to publicly promote or provide signal trading services, they must operate within a compliant framework and cannot remain in a regulatory gray area.

Source: Legislative Yuan | Peng Jinlong responded, emphasizing that similar behaviors are already regulated in traditional financial markets, and influencers promoting financial products must be subject to specific restrictions.

Where is the red line? Examining illegal solicitation risks through the cases of Crypto Hu Shi and BitMart Recent cases have shown that the regulatory red line is becoming increasingly clear. In the past, the well-known virtual currency influencer “Crypto Hu Shi” and his operating company, Yang Ji Co., Ltd., were warned by the Securities and Futures Bureau for failing to complete registration according to the regulations for anti-money laundering for businesses or individuals providing virtual asset services and not submitting the required compliance statement to the Financial Supervisory Commission. The announcement explicitly prohibited them from engaging in solicitation activities related to virtual currency businesses, becoming the first KOL to be officially named since the implementation of the virtual asset registration system. Although Crypto Hu Shi later responded that the industry association has no legal effect, legal personnel from the Financial Supervisory Commission pointed out that operators who do not complete registration and engage in solicitation or platform commercial activities have already breached legal boundaries, especially when these activities are seen as extensions of exchange operations, which carry a high risk of illegality. Further reading: Opening classes to teach how to trade crypto! Whether “Crypto Hu Shi” crossed the legal red line is in doubt. Another notable case is the overseas exchange BitMart. The Securities and Futures Bureau of the Financial Supervisory Commission officially named the platform as an unapproved operator and specifically mentioned that certain KOLs were recruiting a “trading team” on the Threads social media platform, asking participants to register using a designated invitation code. The Bureau clearly stated that BitMart had not completed anti-money laundering registration and was not allowed to provide services or conduct advertising solicitation in Taiwan. The Financial Supervisory Commission reminds the public to refuse to use unapproved overseas platforms and to avoid transferring funds to related accounts. These cases reflect that regardless of whether it is individual KOLs or overseas exchanges, any involvement in illegal solicitation directed at Taiwanese citizens will face naming and warnings from regulatory authorities, and may even trigger criminal investigations.

Unveiling the report generator scam, investors must be wary of fake performance and investment traps Additionally, when market conditions are bullish, scammers often exploit investors’ FOMO (fear of missing out) mentality by using sophisticated tools to create illusions. In the crypto space, a “report screenshot generator” has been popular, where simply inputting the cryptocurrency, leverage, opening price, and name can generate impressive-looking profit statements with one click. These “fake mentors” often establish groups on FB, IG, LINE, or Telegram, using fake accounts and conversations to create an atmosphere of making big money by following the mentor. Their tactics usually start with free trial trades, allowing investors to make small profits to build trust, and then they require larger transfers to designated fake wallets or unknown exchanges. Once the funds are deposited, the mentor and group will vanish overnight, leaving investors with nothing. In addition to technical fraud, these signal trading groups often combine so-called “arbitrage formulas” or “professional teaching” to attract audiences. For example, one KOL claimed on Threads that with just 1,000 USDT in capital, one could generate trading volumes of hundreds of thousands of $USDT, emphasizing that all techniques were taught by the mentor and students could simply copy them. However, such excessive profit guarantees and requests to use specific overseas platform invitation codes conceal significant compliance and safety concerns. The Financial Supervisory Commission and the police have repeatedly reminded that crypto investments should not be blindly relied upon through group hearsay; any “mentor” who requires private transfers or guides individuals to unregulated platforms is highly risky. True market participants should establish independent risk awareness instead of being deceived by fake profit screenshots.

Regulatory implementation and practical challenges, VASP special laws and self-regulatory mechanisms are key to the future Currently, Taiwan’s regulation of virtual asset KOLs is at a critical turning point. In terms of legislative direction, the version proposed by the People’s Party has clearly suggested regulating key opinion leaders, requiring VASPs to disclose company names and licensing information in advertising and marketing, prohibiting false or misleading promotions, and asserting that KOLs must meet certain qualification criteria.

Source: Legislative Yuan | The People’s Party’s version of the “Virtual Asset Service Act Draft” requires VASPs to disclose company names and licensing information in advertising and marketing, prohibiting false or misleading promotions.

However, industry professionals admit that requiring all KOLs to possess specific financial qualifications is extremely challenging. Therefore, the current compromise solution leans towards a model akin to that of the investment trust and advisory association, where businesses conduct regular reviews and compliance control of collaborating influencers, enforcing regulatory responsibilities through contractual obligations. This regulatory action targeting “crypto mentors” is part of the overall process of Taiwan’s “Virtual Asset Service Act” draft. As the VASP registration system gradually takes shape, the regulation of signal trading behaviors will complete a critical part of the regulatory framework. Currently, there are only the following VASP operators providing services in Taiwan, listed in order of strokes:

• Hoya Digital Technology (HOYA BIT)
• Pioneer Digital Technology (ZONE Wallet)
• Modern Wealth Technology (MaiCoin, MAX Exchange)
• Weight Technology (KryptoGO)
• Fusheng Digital Technology (TWEX)
• Cross-Chain Technology (Chainss)
• BitoPro Technology (BitoPro)
• Link Technology Co., Ltd. (XREX Exchange)

Chairman Peng Jinlong of the Financial Supervisory Commission stated that the government version of the special law will be prioritized as legislation, and custody guidelines will be established within six months. In the future, investors should prioritize choosing legally registered platforms and be wary of any unapproved solicitation activities to ensure their rights and interests are protected by regulations.