Introduction
In international trade, businesses traditionally rely on established currencies like the US Dollar for transactions. However, with technological advancements, companies increasingly face requests to accept cryptocurrency payments—including Bitcoin (BTC), Ethereum (ETH), or stablecoins like USDC and USDT. This shift often leaves businesses torn between securing transactions and navigating unfamiliar terrain.
This article aims to educate businesses on the risks and basic procedures of cryptocurrency payments when absolutely necessary. It does not offer investment advice. For investment-related guidance, consult specialized resources. Note: Cryptocurrency regulations evolve rapidly—this content reflects Taiwan’s landscape as of September 2023.
Part 1: Risks of Cryptocurrency Payments
1. Stablecoins ≠ Traditional Currency
- Key Insight: Dollar-pegged stablecoins (e.g., USDT, USDC) are privately issued tokens, not government-backed currency.
- Risk: While designed to maintain a 1:1 USD peg, events like the 2022 UST collapse highlight potential depegging risks.
- Action: Minimize exposure by converting stablecoins to fiat promptly after transactions.
2. High Volatility
- Non-stablecoins: BTC and ETH experience extreme price swings. For example, Bitcoin’s value can fluctuate ±20% within days.
- Recommendation: Beginners should use stablecoins for payments. If holding volatile assets, monitor markets closely.
3. Liquidity Challenges
- Regulatory Hurdles: Traditional banks often resist crypto-fiat conversions due to unclear regulations.
- Taiwan’s Landscape: Only platforms complying with Anti-Money Laundering (AML) laws are approved (see official list%E5%B7%B2%E5%AE%8C%E6%88%90%E6%B4%97%E9%8C%A2%E9%98%B2%E5%88%B6%E6%B3%95%E4%BB%A4%E9%81%B5%E5%BE%AA%E8%81%B2%E6%98%8E%E7%9A%84%E8%99%9B%E6%93%AC%E9%80%9A%E8%B2%A8%E5%B9%B3%E5%8F%B0%E6%A5%AD%E8%80%85%E5%90%8D%E5%96%AE.pdf)).
- Limits: Daily/monthly withdrawal caps may apply. Large transactions risk price slippage.
4. Tax Ambiguity
- Current Status: Taiwan lacks clear crypto tax guidelines.
- Compliance: Maintain detailed records of all transactions, wallet addresses, and bank transfers for 7+ years.
- Warning: Withdrawals may be taxed as income without proper documentation.
5. Regulatory Uncertainty
- Taiwan’s Progress: AML rules for crypto platforms began in 2021; the Financial Supervisory Commission (FSC) became the regulator in 2023.
- Gaps: No definitive tax framework exists. Accounting standards are emerging (see guidance).
6. Technical Complexity
Critical Steps:
- Address Accuracy: Crypto addresses are long alphanumeric strings—use QR codes or copy-paste to avoid errors.
- Chain Selection: Sending USDT via Ethereum (ERC-20) vs. Binance Smart Chain (BEP-20) requires explicit confirmation—mistakes are irreversible.
7. Exchange Risks
- FTX Collapse: The 2022 bankruptcy of the second-largest exchange wiped out billions.
Safeguards:
- Use AML-compliant platforms.
- Withdraw crypto to self-custody wallets when possible ("Not your keys, not your coins").
- Limit holdings on exchanges.
Reminder: As of 2023, Taiwan’s FSC does NOT guarantee platform solvency or asset protection.
Part 2: Getting Started (Taiwan Platforms Only)
1. Choose a Compliant Exchange
- Select from the FSC’s approved AML-compliant list (link%E5%B7%B2%E5%AE%8C%E6%88%90%E6%B4%97%E9%8C%A2%E9%98%B2%E5%88%B6%E6%B3%95%E4%BB%A4%E9%81%B5%E5%BE%AA%E8%81%B2%E6%98%8E%E7%9A%84%E8%99%9B%E6%93%AC%E9%80%9A%E8%B2%A8%E5%B9%B3%E5%8F%B0%E6%A5%AD%E8%80%85%E5%90%8D%E5%96%AE.pdf)).
2. Account Setup
- Complete KYC with ID, address proof, and bank account linking. Processing may take weeks.
3. Receiving Payments (TWD Conversion)
- Confirm token (e.g., USDT) and chain (e.g., ERC-20).
- Share wallet address with payer.
- Await deposit, then sell crypto for TWD via trading pairs (USDT/TWD).
- Withdraw TWD to linked bank account.
4. Making Payments (TWD to Crypto)
- Deposit TWD to exchange.
- Buy crypto (e.g., USDT/TWD).
- Send crypto to recipient’s verified address.
5. Record-Keeping
- Preserve transaction logs, wallet addresses, and accounting entries for 7+ years.
FAQs
Q: Can stablecoins like USDT lose their peg?
A: Yes—historical cases (e.g., UST) show even algorithmic stablecoins can fail. Diversify holdings.
Q: How fast can I convert crypto to cash in Taiwan?
A: With AML-compliant exchanges, TWD withdrawals typically process within 1–3 business days.
Q: Are crypto-to-fiat conversions taxable?
A: Pending clarity; assume withdrawals are reportable income until guidelines emerge.
👉 Explore secure crypto payment solutions for your business needs.
👉 Learn about Taiwan’s latest crypto regulations to stay compliant.