The recent case involving Mandopop superstar Jay Chou and missing Bitcoin assets held through a third party has highlighted significant tax and regulatory risks associated with crypto asset custody arrangements in Taiwan. Chou allegedly entrusted approximately NT$100 million (roughly RMB 23 million) to magician friend Will Tsai for Bitcoin investment management, with the assets now reportedly missing. Custody arrangements, where asset owners delegate management to third parties, remain common practice in cryptocurrency investments. However, such arrangements frequently expose participants to systemic tax and regulatory challenges due to complex structures and multiple tax categories. Taiwan’s current crypto tax framework, while established, maintains considerable ambiguity. The Financial Supervisory Commission (FSC) classifies Bitcoin and similar virtual currencies as speculative virtual commodities rather than legal tender. Taiwan lacks specialized crypto tax regulations, instead applying existing income tax provisions to crypto transactions, contrasting with capital gains tax approaches in jurisdictions like the United States and Germany. Regulatory evolution has accelerated in recent years. Since 2021, Taiwan has transitioned from minimal oversight to implementing anti-money laundering requirements for virtual currency platforms. The FSC’s 2023 “Guidance Principles for Managing Virtual Asset Platform and Trading Business Enterprises” established operational standards, while proposed “Virtual Asset Service Act” legislation, expected to reach the Legislative Yuan in 2025, signals further regulatory formalization. The Taiwan Ministry of Finance’s January 2025 official report clarified that cryptocurrency trading profits constitute “property transaction income” subject to comprehensive income tax. For custody arrangements, this creates potential tax liabilities up to 40% on substantial gains. Without proper documentation, fund transfers within custody relationships risk being reclassified as taxable gifts, potentially triggering gift taxes at progressive rates reaching 20%. Taiwan’s tax authorities increasingly apply substance-over-form principles, examining economic reality rather than formal structures. The proposed platform reporting requirements under forthcoming legislation will significantly enhance transparency, making traditional custody arrangements more vulnerable to tax scrutiny. Investors utilizing custody structures should maintain comprehensive documentation, establish clear contractual agreements defining rights and responsibilities, and ensure proper tax compliance. As Taiwan’s regulatory framework continues evolving toward greater standardization, participants in the crypto ecosystem must remain vigilant about emerging compliance obligations and associated risks.