Taiwan's Legislative Yuan passed the Virtual Asset Service Act in its third reading on June 30, sending the bill to President Lai Ching-te for the next step. According to the Financial Supervisory Commission (FSC), the law moves Taiwan's crypto oversight from anti-money laundering registration to wider supervision of operations, market order and customer protection. The legislation is anticipated to be signed within the next ten days, after which the Executive Yuan will set the official start date for implementation. This comprehensive regulatory framework represents a significant shift from basic anti-money laundering oversight to full-scale regulatory supervision of Taiwan's digital asset sector, with rules expected to take effect by early 2027. The law creates near-term compliance pressure for crypto service providers while implementation remains pending.
The new law mandates that all virtual asset service providers, including cryptocurrency exchanges and platforms, must secure explicit licensing from the Financial Supervisory Commission (FSC) before legally operating in Taiwan. Under the regime, exchanges, custodians and wallet operators must obtain FSC approval and meet requirements for internal controls, cybersecurity and business continuity. Providers must secure separate licenses across seven categories — exchange, trading platform, transfer, custody, underwriting, lending and others, ending the practice of offering multiple services under a single registration. Eight incumbents who previously completed anti-money laundering (AML) registration will have 12 months to apply for licenses and 21 months to obtain certification once the law takes effect, with a possible three-month extension. The Virtual Asset Service Provider Association will assist firms through implementing rules covering establishment, personnel management, internal controls, abnormal-transaction monitoring, outsourcing and financial-statement preparation, and will also operate committees for listing review, discipline and fraud-prevention compliance.
The act creates Taiwan's first stablecoin framework with strict requirements for domestic issuance. Domestic stablecoin issuance is limited to banks only, and tokens must be pegged solely to fiat currencies. In addition, issuers must maintain full one-to-one reserves segregated from company funds and placed in trust with domestic financial institutions. Foreign-issued stablecoins such as USDT and USDC will be treated as regulated commodities and will require FSC approval for listing on licensed exchanges. The legislation introduces tighter rules specifically for stablecoin operations, signaling a comprehensive approach to regulating this segment of the digital asset market. As previously reported by crypto.news, Taiwan's FSC had earlier planned a draft law that would allow local banks to issue stablecoins tied to the New Taiwan dollar, giving the central bank a role in stablecoin oversight and placing local stablecoin approval under the FSC.
The law introduces serious consequences for regulatory violations, with unauthorized operation of crypto platforms or stablecoin services resulting in prison sentences of up to seven years and penalties of up to NT$100 million (approximately $3.14 million). Operating a virtual asset service provider (VASPs) or issuing stablecoins without authorization is punishable by up to seven years in prison and fines of up to $3.1 million. Fraud and market manipulation carry heavier penalties, with offenders facing three to 10 years in prison and fines from NT$10 million to NT$200 million, according to Focus Taiwan. The FSC must draft roughly nine pieces of secondary legislation by early 2027 to fully launch the rules. Lawmakers also adopted a nonbinding resolution requesting the FSC to submit, within one year, a plan to allow licensed firms to offer cryptocurrency derivatives, indicating potential future expansion of the regulatory framework.
