TL;DR:
Taiwan approved its first comprehensive legislation to regulate cryptocurrencies and stablecoins, marking a turning point in the country’s integration into the international crypto market. The Legislative Yuan greenlit a law that establishes a mandatory licensing framework for all virtual asset service providers and regulates for the first time the issuance of stablecoins within the territory.
Taiwan’s Financial Supervisory Commission, known as the FSC, confirmed that the regulation requires all virtual asset service providers, or VASPs, to obtain its approval in order to operate. The law identifies seven categories of VASPs, including exchanges, trading platforms, custodians, and lenders, all subject to internal control requirements, audits, cybersecurity systems, client asset segregation, and financial reporting.
With this legislation, Taiwan aligns itself with other regional governments that already have regulatory frameworks in place, such as Japan, Singapore, and Hong Kong, all active competitors in the industry. The FSC noted that the law strengthens the protection of users’ rights and that the regulation of stablecoins will facilitate the country’s integration into the international market.
Stablecoins issued in Taiwan will require approval from both the central bank and the FSC. Their issuers will be required to maintain sufficient reserves under the custody of a trustee and to undergo regular audits. Those who issue stablecoins or operate a VASP without a license face penalties of up to seven years in prison and fines of up to 100 million New Taiwan dollars, equivalent to approximately $3.1 million. Crypto-based fraud and price manipulation offenses carry penalties of between three and ten years, with fines ranging from approximately $300,000 to $6.3 million.
The date of entry into force has not yet been determined and depends on its publication by the Executive. VASPs that have completed anti-money laundering registration prior to implementation will have a twelve-month window to apply for their license. In parallel, the Legislative Yuan urged the FSC to present within one year a plan enabling the industry to offer derivatives services on crypto assets, with the goal of diversifying available investment options.
