Introduction to the Incident and Its Implications
On October 15, 2025, Mandopop superstar Jay Chou posted two consecutive Instagram stories calling out famous Taiwanese magician Will Tsai, angrily criticizing him for "going missing" and saying, "If you don't show up soon, you're done." He then unfollowed Tsai, causing the incident to go viral. According to public reports, Jay Chou had entrusted his magician friend with 100 million New Taiwan Dollars (approximately 23 million CNY) a few years ago to purchase and manage Bitcoin. Now, this friend has disappeared, and the assets are nowhere to be found. The two main people in this incident are both from Taiwan, China, and are both subject to Taiwan’s tax laws. Jay Chou's act of entrusting his friend to hold Bitcoin on his behalf had nothing to do with tax avoidance. It was most likely because the former was intimidated by the professional barrier to entry into the crypto world and entrusted the latter based on trust.
The nominee holding arrangement involved in this incident, where a principal entrusts an asset under their name to a nominee for management, is particularly common in the field of crypto asset investment. These nominee arrangements often bring systematic tax and regulatory risks to the parties involved due to complex entities, multiple tax types, and other factors. This article uses the Jay Chou crypto nominee incident as a case study, focusing on the crypto tax policies and latest developments in the Taiwan region. It provides a panoramic interpretation of crypto asset nominee arrangements in the Taiwan region to offer a reference for crypto asset investors.
Taiwan's Crypto Tax Policies and Regulatory Developments
Overview of Taiwan's Crypto Tax System
Currently, the tax framework for crypto assets in the Taiwan region, China, has been preliminarily established but remains rather vague. According to Taiwan's "Financial Supervisory Commission" (hereinafter referred to as "FSC") Order Jin-Guan-Zheng-Fa-Zi No. 1080321164 issued in 2019 and a joint statement by the "FSC" and the "Central Bank" of the Taiwan region on December 30, 2024, the Taiwan region considers virtual currencies like Bitcoin not to be currency, lacking legal tender status, and their value is unstable, classifying them as highly speculative virtual commodities. In terms of classification, they are divided into two types: crypto assets with security attributes and ordinary crypto assets. The Taiwan region lacks specific tax rules for crypto assets, mainly relying on the expanded application of existing tax laws. Unlike the United States and Germany, which tax crypto gains as capital gains, in the Taiwan region, income from crypto asset transactions for both individuals and enterprises is subject to income tax. This is similar to the treatment in India and Japan, where crypto income is classified as ordinary income for income tax purposes.
Evolution of Taiwan's Crypto Regulation
The regulatory policy for crypto assets in the Taiwan region is not set in stone. In the last two or three years, with the expansion of the crypto market and global regulatory trends, the Taiwan authorities' regulatory policies and measures for the crypto market have gradually aligned with international standards while also seeking innovation. Starting in 2021, the "FSC" and the Taiwan finance authorities successively issued a series of guidelines, marking a policy transition from "no regulation" to "limited regulation." In 2021, the "FSC" brought virtual currency platforms under the jurisdiction of anti-money laundering (AML) regulations, requiring platforms to perform transaction monitoring and reporting obligations. Although this move did not directly involve taxation, it laid the groundwork for future tax audits. In 2022, the Taiwan finance authorities mentioned in their annual tax planning that they would strengthen the review of crypto asset transactions by high-net-worth individuals, focusing on cracking down on tax evasion. In September 2023, the "FSC" released the "Guidelines for the Management of Virtual Asset Platforms and Trading Business Enterprises (VASP)" (hereinafter referred to as the "Guidelines") as a reference for businesses to operate in compliance. The "Guidelines," building on the foundation of the Money Laundering Control Act, regulate the business operations of VASP operators.
In 2024-2025, the "FSC" and the Taiwan finance authorities made further substantial progress in the research and systems for cryptocurrency tax policies. In 2024, the "FSC" announced that the "Virtual Asset Service Act" would be submitted to the "Legislative Yuan" in June 2025 to complete the legislative process; the drafting of this law is currently underway. On January 13, 2025, the Taiwan finance authorities submitted a written report, "Regulations on Cryptocurrency Income Taxation" (Tai-Cai-Shui-Zi No. 11304672340), to the "Finance Committee of the Legislative Yuan," clarifying the tax framework for cryptocurrency in Taiwan. In July, the "Legislative Yuan's Organic Laws and Statutes Bureau" of the Taiwan region released a special research report on cryptocurrency, "A Research Report on Cryptocurrency Tax Norms from the Perspectives of Law, Policy, and Global Practices." The report pointed out that although Taiwan has shifted from its original "wait-and-see" approach to substantively including cryptocurrency in the scope of taxation, it still lacks clear legislative norms and enforcement rules. It recommended that the Taiwan finance authorities should study and propose the addition of a special tax chapter for virtual assets or enact a special law.
Overall, the policy dynamics in recent years indicate that the tax policy for crypto assets in the Taiwan region is moving towards standardization and normalization at both the legislative and policy enforcement levels, striving to provide a fairer and more transparent market environment for the development of the local crypto asset industry.
Analyzing Tax and Regulatory Risks of Nominee Crypto Holdings in Taiwan
Returning to this incident, the Bitcoin nominee holding dispute between Jay Chou and his friend appears to be a simple civil contractual dispute. However, it deeply reveals the identification dilemmas and compliance risks that crypto assets face under the traditional tax law framework. Under the current tax system in the Taiwan region, this kind of nominee arrangement not only risks triggering multiple tax burdens, such as consolidated income tax and gift tax, but also faces the risk of being pierced for inspection by tax authorities due to the application of the "principle of substance-over-form taxation." As the "FSC" promotes the "Virtual Asset Service Act" legislation, the transparency requirements for crypto asset transactions will significantly increase. Nominee holding, this traditional method of asset holding, will face unprecedented tax challenges. To specifically discuss the tax and regulatory risks involved in nominee arrangements, we must start from the current laws and regulations in the Taiwan region to talk about the issues of tax type determination, tax calculation, and regulation related to crypto asset nominee arrangements.
Taxes Involved and Their Legal Basis
Consolidated Income Tax
According to the written report "Regulations on Cryptocurrency Income Taxation" (Tai-Cai-Shui-Zi No. 11304672340), for non-security-type virtual currencies (such as Bitcoin, Ethereum), the income from their transactions is classified as "income from property transactions." Therefore, regardless of how Jay Chou's funds are returned, income tax will inevitably be triggered at the stage when the Bitcoin is sold for a profit. This is the heaviest and most certain tax burden in the entire transaction. According to Article 14, Paragraph 1, Category 7 of the "Income Tax Act" in the Taiwan region, the formula for calculating the consolidated income tax arising from the nominee arrangement is: Taxable Income = Total Sales Revenue - Original Acquisition Cost - Necessary Expenses. For a huge income of nearly 200 million, the highest tax rate of 40% will almost certainly apply. Tax Payable = Taxable Income × 40%. From the perspective of tax liability, in a nominee arrangement, if the nominee is the nominal holder, but the actual beneficiary is the principal, the tax liability may fall on the principal. However, if the nominee disposes of the assets without authorization, it may lead to ambiguous tax liability.
Gift Tax
Nominee arrangements may be accompanied by fund transfers. In the absence of sufficient evidence to prove it is a "principal-agent investment" relationship, the act of transferring funds could be presumed by the tax authorities to be a "gratuitous gift." According to Article 4, Paragraph 2 of the "Estate and Gift Tax Act" in the Taiwan region: "The term 'gift' in this Act refers to the act of a property owner giving their own property to another person without compensation, which takes effect upon acceptance by the other person." If rigorous nominee agreements, explanations of fund flows, and other documents cannot be provided, the tax authorities have the right, based on the substantive economic facts, to determine that the "principal" has gifted the funds to the "nominee," thereby levying gift tax. In terms of calculation, according to Article 19 of the Act: "Gift tax is based on the donor's total annual gift amount, minus the deductions specified in Article 21 and the exemption specified in Article 22, resulting in the net taxable gift amount." A progressive tax rate of 10% to 20% is applied. Since the asset amount in this case clearly exceeds 50 million, the 20% progressive rate should apply. The calculation formula is: Tax Payable = (Total Gift Amount - 2.2 million exemption - deductions) × 20%.
Tax and Legal Risks Associated with Nominee Arrangements
In recent years, the Taiwan region's cryptocurrency tax policy has gradually moved from temporary guidelines toward specialized legislation. The "Legislative Yuan" has clearly recommended the formulation of a special tax law aimed at resolving the many gray areas in the current framework, such as disputes over profit and loss offsetting, whether to tax unrealized gains, and cost basis determination. In terms of enforcement, there is also a gradual push to strengthen information transparency and tax source control. This is prominently reflected in the "Virtual Asset Service Act" that the FSC (Financial Supervisory Commission) is currently pushing to enact. The core of this law is to establish a platform registration system and strengthen information reporting mechanisms. This will greatly enhance the tax authorities' ability to obtain transaction data, meaning future compliance pressure will significantly increase. This suggests that investors should pay close attention to announcements from the "FSC" and the Taiwan finance authorities and adjust their strategies in a timely manner. For example, if a platform reporting system is implemented in the future, nominee arrangements may be more easily audited.
Furthermore, crypto asset nominee arrangements in the Taiwan region involve complex tax and regulatory issues. In addition to potentially bringing extra tax burdens to investors, they can also lead to asset losses. This is because Article 7 of the "Taxpayer Rights Protection Act" in the Taiwan region clearly states that the taxpayer is the person who actually receives the income, which is an embodiment of the principle of substance-over-form taxation. In a nominee relationship, although the assets are registered in the nominee's name, if the actual capital contribution, beneficial ownership, and right of disposal all belong to the principal, the tax authorities can identify the principal as the substantive rights holder and require them to fulfill their tax obligations. In Jay Chou's case, if the nominee relationship cannot be proven, the tax authorities might tax the nominee, leading to an asset loss for the principal. If a nominee arrangement is truly necessary, investors need to proactively declare crypto asset gains as required, keep complete transaction records, and must sign a written agreement for the nominee arrangement that clearly defines the rights, obligations, and tax responsibilities of both parties.
Conclusion: Lessons from the Jay Chou Incident
Jay Chou's case is by no means an isolated one; it is a mirror reflecting the risks of crypto asset nominee arrangements, revealing the systemic risks of such arrangements under the legal and tax framework of the Taiwan region. The world of crypto assets values decentralization and anonymity, but the centralized responsibility of tax compliance remains firmly anchored to every single investor. When faced with risks, a superstar and an ordinary crypto investor are no different. How to control these potential tax and legal risks is a topic worthy of long-term attention.