Taiwan just wrote crypto's rulebook

Taiwan has moved decisively to regulate its digital asset sector. Lawmakers in the Legislative Yuan approved the Virtual Asset Service Act during its third reading, forwarding it to President Lai Ching-te for formal signing, which is anticipated within the next ten days. Once signed, the Executive Yuan will set the official start date for the rules.

The Financial Supervisory Commission (FSC) said the law moves Taiwan's crypto oversight from anti-money laundering registration to wider supervision of operations, market order, and customer protection. The act defines seven categories of virtual asset service provider: exchanges, trading platforms, transfer providers, custodians, underwriters, lenders, and a catch-all for others.

Licensing, Transition Periods, and Stablecoin Rules

Under the new law, companies offering virtual asset services in Taiwan must receive authorization from the FSC before operating. Firms already registered for AML compliance get a transition window under which they must apply for a license within 12 months of the act taking effect and obtain full approval within 21 months, with a single three-month extension available. Those that miss the deadline will be barred from continuing to operate.

A major component of the legislation is the introduction of Taiwan's first formal framework for stablecoins. Under the newly enacted rules, any institution wishing to issue a fiat-pegged token must secure joint approval from the FSC and the Central Bank of the Republic of China (Taiwan). The law mandates that stablecoin issuers maintain 100% reserve asset backing, held in segregated trust accounts within domestic financial institutions. To protect consumers, these reserves are legally insulated from corporate bankruptcy estates and are subject to mandatory independent audits.

Serious Consequences for Violations

Running an unlicensed crypto platform or issuing stablecoins without authorization can bring up to seven years in prison and fines of up to NT$100 million, or approximately $3.1 million. Fraud or market manipulation carries three to ten years behind bars and fines ranging from NT$10 million to NT$200 million, about $314,000 to $6.3 million.

Taiwan joins a group of jurisdictions, including Japan, Singapore, Hong Kong, and the EU under its MiCA regime, that have moved crypto out of the regulatory fringes and into licensed finance. The Financial Supervisory Commission said it will continue working on detailed rules and consult with industry groups before the framework is fully implemented.

Sources:
CoinDesk: Taiwan's Sweeping Crypto Law Raises the Bar
Decrypt: Taiwan Passes Sweeping Crypto Law With Licensing, Stablecoin Rules
Taipei Times: Legislature Passes Cryptocurrency Regulations