How Businesses Can Use Cryptocurrency (Stablecoins) for Payment and Receipt of Trade Funds

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In international trade, businesses traditionally rely on widely accepted fiat currencies like the U.S. dollar for cross-border payments. However, with the rapid evolution of digital finance, more companies are encountering demands to transact using cryptocurrencies—particularly stablecoins such as USDC and USDT—for invoice settlements. While this shift presents new opportunities, it also introduces unfamiliar risks and operational complexities.

This article aims to inform businesses about the potential risks and procedural basics when using cryptocurrency (especially stablecoins) for trade-related payments out of necessity. It does not constitute investment advice. For those interested in cryptocurrency investing, please consult specialized financial resources. Additionally, as blockchain technology and regulatory frameworks evolve rapidly, this guide is based on conditions in Taiwan as of September 2023. If operating outside Taiwan or reading at a later date, always verify current regulations.

Understanding the Risks of Using Cryptocurrency in Business Transactions

Before integrating crypto into your business operations, it's crucial to understand the inherent risks—even with so-called "stable" digital assets.

1. Stablecoins Are Not Equal to Fiat Currency

While USD-backed stablecoins like USDC and USDT are designed to maintain a 1:1 peg with the U.S. dollar, they are issued by private entities—not governments. Their value depends on market confidence and the issuer’s ability to maintain adequate reserves.

Unlike traditional dollars, which are backed by central banks, a stablecoin can de-peg or collapse entirely if trust erodes. The dramatic failure of TerraUSD (UST)—once the third-largest stablecoin—demonstrates how quickly a supposedly “stable” asset can lose billions in market value within days.

👉 Learn how digital asset platforms manage risk in volatile markets.

While USDC and USDT operate under different mechanisms than UST and have maintained stronger stability, businesses must still treat them as high-risk instruments until fully regulated and audited. If you must accept stablecoin payments, minimize holding time and convert to fiat currency as soon as possible.

2. Volatility Risk with Non-Stable Cryptocurrencies

Assets like Bitcoin (BTC) and Ethereum (ETH) are subject to extreme price fluctuations. A payment worth $50,000 today could drop to $40,000 overnight—or surge to $60,000. For businesses focused on predictable cash flow, this volatility poses significant financial risk.

Recommendation: When starting out, use dollar-pegged stablecoins only for transactions. Avoid holding BTC or ETH unless you have a clear strategy and risk management plan in place.

3. Limited Integration Between Crypto and Traditional Finance

Despite growing adoption, bridging cryptocurrency with real-world financial systems remains challenging. Most traditional banks remain cautious due to unclear regulations and compliance concerns.

In Taiwan, the Financial Supervisory Commission (FSC) has published a list of virtual asset platforms that have completed anti-money laundering (AML) compliance declarations. While this is a step forward, it does not mean these platforms are fully regulated or that your assets are protected.

Some compliant platforms allow users to link bank accounts and conduct TWD deposits/withdrawals. However:

4. Tax Compliance Requires Meticulous Record-Keeping

Taiwan currently lacks comprehensive tax guidelines for cryptocurrency transactions. This creates uncertainty: when you withdraw funds from an exchange to your bank account, tax authorities might treat the entire amount as taxable income.

To protect your business:

Without proper records, you risk overpayment or disputes during audits.

5. Regulatory Uncertainty Persists

Although Taiwan began regulating crypto platforms’ AML compliance in 2021 and designated the FSC as the overseeing body in 2023, the legal framework is still evolving. As of late 2023:

Businesses must stay informed and anticipate future changes in compliance requirements.

6. Blockchain Operations Are Error-Prone

Transferring crypto involves two critical pieces of information:

Mistakes are irreversible:

Always:

7. Exchange Platforms Are Not Fully Secure

The collapse of FTX in November 2022—once the world’s second-largest crypto exchange—serves as a stark reminder: “Not your keys, not your coins.”

Even compliant platforms act as custodians, not banks. Your crypto is held in trust, but:

👉 Discover how secure crypto platforms protect user assets today.

Best practice: Only keep necessary funds on exchanges. Transfer excess amounts to secure wallets or convert back to fiat immediately after completing transactions.

How to Begin Accepting Cryptocurrency Payments (Taiwan-Focused Guide)

If your business must accept crypto payments, follow these steps using compliant Taiwan-based platforms:

Step 1: Choose a Compliant Exchange Platform

Refer to the FSC’s official list of platforms that have completed AML compliance declarations:

✅ Prioritize platforms on this list to reduce regulatory risk.

⚠️ Reminder: Inclusion does not imply full regulation or asset protection.

Step 2: Register and Complete KYC Verification

Sign up on your chosen platform and complete Know Your Customer (KYC) verification. This typically requires:

Note: Some platforms may take weeks or months to verify corporate accounts.

Step 3a: Receiving Payments (Crypto → TWD)

  1. Confirm with the payer:

    • Cryptocurrency type (e.g., USDT, USDC)
    • Blockchain network (e.g., ERC-20)

  2. Provide your exchange wallet’s:

    • Token name
    • Deposit address
    • Correct chain information
  3. Wait for confirmation on the blockchain.
  4. Sell the crypto on the platform (e.g., USDT/TWD pair).
  5. Withdraw TWD to your linked bank account.

Step 3b: Making Payments (TWD → Crypto)

  1. Deposit TWD into your exchange account via bank transfer.
  2. Buy the required cryptocurrency (e.g., BTC/TWD).

  3. Obtain recipient’s:

    • Wallet address
    • Token type
    • Blockchain network
  4. Send funds and pay network fees.
  5. Confirm receipt with the counterparty.

Step 4: Maintain Full Accounting Records

Document every step:

This protects against tax misclassification and supports audit readiness.

Frequently Asked Questions (FAQ)

Q: Can I legally use stablecoins for business payments in Taiwan?
A: Yes, but there is no specific legal framework yet. Transactions are permitted through compliant platforms, though tax and regulatory clarity is pending.

Q: Should I hold cryptocurrency after receiving payment?
A: Not recommended unless you have risk management protocols. Convert to fiat promptly to avoid exposure to volatility or platform failure.

Q: What happens if I send crypto to the wrong address or chain?
A: Transactions are irreversible. Funds sent to incorrect addresses or chains are typically lost forever. Always verify details twice.

Q: Are my crypto assets insured if an exchange fails?
A: No. Unlike bank deposits, crypto holdings on exchanges are not covered by government insurance schemes in Taiwan.

Q: How should I report crypto income for taxes?
A: Maintain full records. While exact rules are unclear, treating crypto receipts as revenue and documenting conversions is the safest approach.

Q: Can I use international exchanges instead?
A: Yes, but they may not support TWD banking and could complicate compliance. Use only if necessary and ensure KYC alignment with local laws.

👉 Explore how leading platforms streamline crypto transactions for enterprises.

As digital finance continues to reshape global commerce, businesses must balance innovation with caution. By understanding the risks, following secure procedures, and maintaining rigorous documentation, companies can navigate crypto payments safely—even in uncertain regulatory environments.

Remember: Stablecoins aren’t savings accounts, exchanges aren’t banks, and blockchain transactions aren’t reversible. Proceed with awareness, preparation, and minimal exposure.