Taiwan's Financial Supervisory Commission (FSC) has formally rejected Union Bank's (2838) application to directly invest in the offshore parent company of crypto exchange MaiCoin. The rejection hinges on Article 74 of the Banking Act: the target entity, Modernity Financial Holdings, Ltd, is a Cayman Islands-registered shell with no actual operations and is not a financial-related business, limiting banks to a maximum 5% stake in non-financial enterprises. Union Bank disclosed that the FSC had verbally warned about potential issues early on, but the bank requested a written ruling for governance tracking, which eventually led to the formal rejection notice.
Article 74 Stumbling Block: Offshore Holding Company Lacks Operational Substance
The fatal flaw lies in Article 74, which mandates that commercial banks must obtain regulatory approval for any investment (financial or non-financial) and the investee must have operational substance. The FSC deemed Modernity as neither a financial business nor possessing any real operations, closing the door on direct approval.
Original Plan: $27.8 Million for 9.67% Stake
According to Union Bank's May 11 board resolution, the plan was to invest $27.817 million for 5.357 million shares of Modernity Financial Holdings, combined with shares held by its subsidiary Union Venture, bringing the total stake to 9.67%. That blueprint is now off the table.
Workaround: Major Shareholder's Personal Firm Takes Over
Union Bank is not giving up. Sources indicate that the bank's major shareholder will deploy a personal related enterprise to directly invest in Modernity, bypassing the Banking Act's equity limits under a different legal entity. The bank stresses this respects the regulator's decision while maintaining strategic positioning in the MaiCoin ecosystem.
Cobranded Cards and Crypto Custody Business Unaffected
The equity restructuring does not affect existing business collaborations. Union Bank and MaiCoin continue to operate cobranded credit cards, USD deposit services (linked to Union Bank foreign currency accounts), and Taiwan's first virtual asset custody trial. Union Bank confirmed these services remain unchanged. Earlier reports indicated at least four Taiwanese financial holding companies are eyeing VASP acquisitions, with MaiCoin, BitoPro, and HOYA BIT on the list. The integration between traditional finance and crypto assets in Taiwan continues to accelerate.