Taiwan Introduces Comprehensive Crypto Law Covering VASPs and Stablecoin Issuance
Taiwan's Legislative Yuan has passed the Virtual Asset Service Act, introducing licensing rules, reserve requirements, and criminal penalties for crypto operators and stablecoin issuers. The law expands oversight well beyond anti-money-laundering compliance.
Taiwan has taken a significant step toward comprehensive digital asset regulation after its Legislative Yuan approved the Virtual Asset Service Act on its third reading on June 30. The legislation marks a fundamental shift in how the country governs crypto — moving well beyond the previous narrow anti-money-laundering framework toward full-scale operational oversight.
The Financial Supervisory Commission (FSC) confirmed that the new law elevates supervision of virtual asset service providers (VASPs) from a simple AML compliance exercise to a broad set of operational and market-conduct standards. This signals Taiwan's intent to position itself as a credible and well-regulated player in the global virtual asset space.
The Act identifies seven distinct categories of VASPs that fall under its scope: virtual asset exchanges, trading platform operators, transfer service providers, custodians, underwriters, lending service providers, and a general catch-all category for other virtual asset service providers. All entities operating in these categories will now be subject to stricter requirements, including mandatory customer asset segregation, internal controls, cybersecurity protocols, independent audits, and standardized financial reporting.
To ease the transition, the law provides a grace period for businesses that had already completed AML registration prior to the Act taking effect, as well as for financial institutions already offering virtual asset services under FSC oversight. These firms will have 12 months from the law's implementation date to submit a license application to the FSC, and must secure full regulatory approval and an operating license within 21 months. In exceptional circumstances, this licensing deadline can be extended once by up to three additional months.
On the stablecoin front, the Act introduces a dual-approval requirement: any entity wishing to issue stablecoins within Taiwan must receive authorization from both the Central Bank of the Republic of China and the FSC. Issuers are also mandated to maintain full reserves backing all stablecoins in circulation, hold those reserve assets in trust, submit to regular audits, and meet ongoing disclosure obligations.
The FSC emphasized that establishing a domestic stablecoin framework will help Taiwan align with international regulatory norms and strengthen its standing in the global virtual asset market — a move described as vital for the long-term, sustainable development of the sector.
The penalties embedded in the new law are notably firm. Any party found guilty of fraud or market price manipulation faces a prison term of three to ten years, accompanied by financial penalties ranging from NT$10 million to NT$200 million (approximately $314,000 to $6.3 million USD).
The exact date the legislation comes into force will be determined by the Executive Yuan.
