Why is it so difficult to buy virtual currencies with a credit card in Taiwan? Policy restrictions and alternative investment options

Many investors in Taiwan have repeatedly encountered obstacles when trying to purchase virtual currencies with credit cards. Is it due to banks’ non-cooperation or are there other hidden reasons? The answer is: Taiwan’s policies explicitly restrict credit card investments in cryptocurrencies. This article provides an in-depth analysis of the underlying reasons and the alternative methods investors can use to enter the market.

Why does Taiwan ban the use of credit cards to buy virtual currencies?

In 2022, Taiwan’s Financial Supervisory Commission issued a letter to the Banking Association, prohibiting financial institutions from signing virtual asset service providers (VASPs) as credit card merchant partners. Simply put, the government does not allow deposits into cryptocurrency exchanges via credit cards.

This policy was not made out of thin air. The government’s main concerns include three aspects:

Anti-Money Laundering and Security Risks

Due to their decentralized nature, virtual currencies are easily used for money laundering, funding terrorism, and other illegal activities. Compared to traditional finance, the government’s regulatory capacity over virtual currencies is significantly lacking. Therefore, they adopt the strictest source controls—blocking the primary deposit channel via credit cards.

Decentralization Limits Direct Intervention

When stock markets decline, the government can stabilize the market through policy tools. However, because cryptocurrencies are decentralized, the government cannot directly regulate them. In recent years, exchange failures and NFT crashes have caused substantial investor losses. These investors then complain to regulators, putting the government in a dilemma—unable to prevent people from investing, yet having to face public dissatisfaction when investments fail.

Consumer Complaints Drive Regulation

While the government cannot control individual investment decisions, it can regulate service providers. By restricting deposit channels for exchanges, it indirectly reduces investment volume and related complaints. This pragmatic approach is currently in effect.

It’s worth noting that, the same virtual currencies have already flourished in Europe and America. Major global credit card companies like Visa and Mastercard actively cooperate with exchanges, and international regulatory bodies are gradually establishing friendly operational frameworks. In contrast, Taiwan’s current policies are more declarative than substantive defenses.

The Ultimate Comparison of Deposit Methods: Credit Card, Wire Transfer, C2C – Which is Most Cost-Effective?

Investors typically have multiple options for depositing funds, each with advantages and disadvantages. Here is a comparison of the three most common methods:

How high are the real costs of using credit cards?

While credit card deposits seem quick, the actual costs are often underestimated. Besides platform fees of 1.5~3%, you must also account for exchange rate spreads. International credit card exchange rates are typically 3~5% worse than bank remittance rates. Simple calculation: buying crypto with 100 yuan via credit card might net only 94~95 yuan worth of crypto. For small investors, the difference is minor, but large investors pay close attention, which is why institutions and big players prefer wire transfers.

Why do large investors prefer wire transfers?

Wire transfers may seem complex but are highly advantageous for large sums: fees are mostly fixed rather than percentage-based, so the larger the amount, the lower the relative fee. Although it takes hours or days for the funds to arrive, this has little impact on long-term holders. Some exchanges even offer higher-than-market interest rates to attract large capital.

Pros and Cons of Buying Virtual Currencies with Credit Cards

Advantages:

• Easy operation; just a few clicks on your phone or computer
• Can accumulate credit card spending and earn rewards
• The most convenient entry method for small capital investors

Disadvantages:

• High fees (above 1.5%, some platforms up to 3%)
• Poor exchange rates, making the overall cost higher than bank transfers
• For large investments, costs increase dramatically, significantly reducing the amount of crypto received
• Facing policy restrictions in Taiwan; many banks have stopped supporting this method

Alternative Entry Paths for Cryptocurrency Investment

Since Taiwan bans direct credit card purchases, but this ban mainly targets domestic VASP providers and does not restrict foreign platforms, investors still have other options:

Option 1: Use Domestic Exchanges

First, buy USDT (a stablecoin) with TWD on local exchanges, then transfer to international exchanges to purchase Bitcoin, Ethereum, and other main cryptocurrencies. This approach circumvents policy restrictions and is transparent and straightforward.

Option 2: C2C Peer-to-Peer Trading

Trade directly with other users on certain exchanges’ C2C markets, using TWD or other payment methods to buy cryptocurrencies. This method offers high flexibility but carries higher counterparty risk; choose reputable sellers carefully.

Option 3: Contract for Difference (CFD) Trading

If you only want to profit from price fluctuations without holding actual cryptocurrencies, you can opt for CFDs offered by regulated brokers. Compared to exchanges, regulated brokers are under strict financial regulation, making platform risk lower. These trades support 24-hour two-way trading, with customizable leverage and position sizes.

How to Buy Virtual Currencies with a Credit Card: Step-by-Step

Despite Taiwan’s policy restrictions, the basic operational process remains similar. Typical steps include: register on a platform → verify identity (KYC) → select deposit method → complete the transaction → withdraw.

Key points for operation:

1. Choose the cryptocurrency pair: Find the desired trading pair (e.g., BTC/USD, ETH/USD) on the platform
2. Confirm deposit method: Select credit card as the payment option
3. Enter the amount: Input the amount to buy, paying attention to currency units
4. Review fees: Check all fees and exchange spreads before confirming
5. Complete the transaction: Follow platform instructions to verify identity and place the order

Many platforms offer new user cashback or promotional activities to increase engagement, but always read the terms carefully before participating.

Future Outlook: The Inevitable Trend of Cryptocurrencies

Regardless of policy changes, the importance of virtual currencies continues to rise. Initially, small retail investors participated, but as large corporations recognize that fiat currencies are depreciating during quantitative easing, they are shifting toward crypto assets. Several countries worldwide have adopted Bitcoin as legal tender or official assets, valuing its high liquidity and relatively stable exchange rate.

Whether Taiwan’s policy restrictions are sustainable long-term remains to be seen. If short-term policies treat cryptocurrencies as forbidden zones, investors may miss out on global asset allocation opportunities. Conversely, seeking legitimate and transparent entry methods can enable more rational participation in this wave of global finance.

Conclusion

While credit cards were once the most convenient way to buy crypto, they are now practically restricted in Taiwan. Investors facing this reality should turn to other suitable channels—such as purchasing stablecoins on domestic exchanges, engaging in C2C trading, or considering CFD investments. Regardless of the method chosen, understanding the costs, risks, and procedures of each option is the first step toward rational investing.