Taiwan's fintech regulatory sandbox accepts first startup

Written by Matt Fulco || February 26 2019

Taiwan's regulatory sandbox has approved its first startup, Hong Kong-based financial settlement network EMQ. In Taiwan, EMQ will focus on remittance services for Indonesian, Vietnamese and Filipino migrant workers - a large and growing market. In 2018, migrant workers in Taiwan sent more than US$3 billion home, according to Taiwan's central bank.

Between 2010-2016 Southeast Asian immigrants to Taiwan rose from 130,000 to 170,000, data compiled by the Taiwan government show.

EMQ aims to boost financial inclusion in Southeast Asia, the company said in a February press release. Its remittance service will allow migrant workers in Taiwan to use their smartphone as a comprehensive digital wallet offering services such as instant cash pickup, bank deposits to partner banks, mobile wallet deposits or home delivery of cash to their families in Southeast Asia.

EMQ came to Taiwan at the right time. The island is both boosting economic links with Southeast Asia and trying to establish itself as a regional fintech hub. While Taiwanese banks began expanding to Asean six years ago, they have not focused on digital business. The arrival of a global fintech firm - EMQ has operations across Asia and plans to expand to Europe, the Middle East and North America - augurs well for Taiwan's fintech ambitions. 

“Taiwan is one of the most important strategic growth markets for EMQ and the regulatory approval from the FSC [Financial Supervisory Commission] represents a significant milestone for our operation in Taiwan," Max Liu, co-founder and CEO of EMQ, said in the press release. "We look forward to introducing more innovative solutions that will make a difference in the lives of these migrant workers, while supporting Taiwan to be a fintech hub in the region."

To be sure, Taiwan lacks the global financial clout of Singapore and Hong Kong, which have attracted the most fintech investment in Asia outside of mainland China. Yet Taiwan does have superior engineering talent and much lower costs than either of those cities, as well as a comprehensive tech hardware supply chain.

Taiwan's fintech regulatory sandbox allows companies to experiment with innovative financial products and services without running afoul of existing regulations for up to one year, but it is possible to apply for a six-month extension. If the experimentation requires changing existing laws, the extension could last up to three years, which is longer than is the case in other countries, noted Taipei-based law firm Winkler Partners in an August 2018 commentary.

As other sandbox initiatives have borne fruit - notably the UK's - "there are high hopes that such a system can foster much-needed innovation in Taiwan’s finance industry as well," Winkler Partners said.