Taiwan passed legislation requiring mandatory licensing for virtual asset service providers (VASPs), establishing a regulatory framework for stablecoin issuance, and introducing criminal penalties for fraud and market manipulation.
Taiwan’s legislature passed the Virtual Asset Service Act in its third reading, creating the country’s first comprehensive regulatory framework for the virtual asset market. The legislation significantly expands government oversight of the sector. Previously, regulation focused primarily on anti-money laundering measures. Under the new law, it now covers all aspects of market participants’ operations, including corporate governance, customer protection, and financial soundness.
Key provisions of the law:
- Mandatory VASP licensing. All virtual asset service providers (VASPs) must obtain approval from Taiwan’s Financial Supervisory Commission (FSC) before beginning operations. The law applies to 7 categories of businesses, including crypto exchanges, trading platforms, custodians, transfer service providers, underwriters, lending service providers, and other virtual asset service providers.
- Comprehensive operational requirements for VASPs. The law introduces requirements covering financial reporting, internal controls and audits, cybersecurity, fitness and propriety standards for executives and personnel, segregation of customer assets, and listing procedures for virtual assets.
- Stablecoin regulation. Stablecoins may be issued in Taiwan only with approval from the Central Bank and a license from the FSC. Issuers must maintain full (100%) reserve backing, hold reserves at domestic financial institutions, place those reserves in trust, and undergo regular audits and public disclosures.
- Protection for stablecoin holders. Reserve assets must be fully segregated from an issuer’s own assets. In the event of bankruptcy, those reserves won’t become part of the bankruptcy estate, and stablecoin holders will have priority claims over them. Issuers are also prohibited from paying interest or any other form of yield on issued stablecoins.
The law won’t take effect immediately. Its effective date will be set later by Taiwan’s Executive Yuan, the country’s highest executive authority.
Taiwan’s Central News Agency (CNA) reported that fraud, dissemination of false information, and market manipulation are punishable by 3 to 10 years in prison and fines ranging from NT$10 million to NT$200 million. Operating a virtual asset business or issuing stablecoins without the required license carries a prison sentence of up to 7 years and fines of up to NT$100 million.
The law also includes a transitional period for companies already registered under Taiwan’s anti-money laundering framework. Once the law takes effect, those firms will have 12 months to apply for a license and 21 months to obtain regulatory approval and receive a license. If necessary, the deadline may be extended once by up to 3 additional months.
Lawmakers also passed a supplementary resolution directing the FSC to prepare, within 1 year, a proposal for opening the market to virtual asset derivatives. Taiwan’s authorities said the new legislation is expected to strengthen investor protection, boost market confidence, and help align the country’s digital asset framework with international regulatory standards.
In 2025, the FSC chair announced plans to launch a national stablecoin in the second half of 2026, following the passage of the industry’s foundational legislation.
