TAIPEI (Taiwan News) — In response to the collapse of crypto exchange FTX and calls to rescue over 500,000 Taiwanese users, the country's financial regulator said it will look at how international peers are responding to the crisis and added that losses can be deducted from taxable income.
FTX filed for voluntary Chapter 11 last week and those storing crypto through FTX may only receive a payout, probably discounted, after the company has settled a massive amount of debt and legal fees.
Taiwan has over 500,000 FTX account holders, according to Taiwan Block Chain Academia (TBA), with potential losses likely totaling NT$3 billion. Kuomintang Legislator Lee Guei-min (李貴敏) has been pressuring the Financial Supervisory Commission to come up with a plan to rescue FTX users.
Among 751 FTX users taking Nextapple's online survey as of Friday, 38.2% of correspondents report their estimated loss at US$1,001-US$10,000, 30.4% at US$10,001-US$50,000, 8% at US$50,001-US$100,000, and 6.9% at US$100,001-US$300,000. There were 17 people estimating a loss of over US$1 million, and the highest loss surveyed was US$7 million.
In response, FSC issued a statement on Thursday (Nov. 17) that the regulator has issued warnings to crypto investors multiple times about the risks of trading crypto assets, including the lack of transparency of their trading platforms and extreme volatility. The FSC added it should not be held responsible for the losses to local FTX investors as the foreign crypto exchange is not under its jurisdiction and scrutiny.
"Investors, regardless of individuals or corporations, can list capital losses when they are filing taxes next year to get the losses deducted from their tax bill," said Lin Chih-chi (林志吉), Deputy Director General of the country's Banking Bureau. In Taiwan, the time of filing individual income tax returns for the preceding fiscal year is from May 1-31.
Meanwhile, local blockchain self-help groups including TBA and Taiwan FinTech Association are trying to calm desperate FTX users by offering tips and daily updates to help investors secure their assets stored from the failed exchange.