Taiwan Passes Crypto and Stablecoin Bill in Major Regulatory Shift

• Taiwan mandates licenses for crypto firms under the new Virtual Asset Service Act.
• Stablecoin issuers need central bank and FSC approval with full reserve backing.
• New law imposes tougher penalties for fraud, manipulation, and unlicensed operations.

Taiwan has passed the Virtual Asset Service Act, establishing its first comprehensive legal framework for cryptocurrency businesses and stablecoin issuers. The legislation introduces mandatory licensing requirements, stronger compliance standards, and tougher penalties for fraud and unlicensed operations. It also creates a dedicated regulatory regime for stablecoins while providing greater legal clarity for the country’s digital asset industry.

Taiwan Establishes New Rules for Crypto Businesses

Taiwan’s legislature approved the Virtual Asset Service Act after its third reading, creating a comprehensive regulatory framework for the domestic cryptocurrency industry. The bill will now proceed for promulgation before the Cabinet announces the official implementation date.

The legislation requires every virtual asset service provider to obtain approval from the Financial Supervisory Commission before offering regulated cryptocurrency services. Previously, crypto businesses only needed to comply with anti-money laundering registration requirements before operating.

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The new framework expands regulatory oversight by introducing seven categories for virtual asset services across the cryptocurrency industry. These categories include exchanges, trading platforms, transfer services, custodians, lenders, underwriters, and other designated virtual asset activities.

Licensed companies must establish internal control systems while strengthening cybersecurity and operational risk management across their businesses. They must also separate customer assets from company funds and follow clear procedures for listing and delisting virtual assets.

Existing cryptocurrency businesses operating under current anti-money laundering registration rules will receive a transition period before full licensing becomes mandatory. Companies must submit license applications within twelve months and complete regulatory approval during the extended compliance period.

Authorities said the legislation strengthens investor protection while creating clearer operating standards for businesses participating in Taiwan’s digital asset market. The framework also reduces regulatory uncertainty by replacing the previous registration-based approach with comprehensive licensing requirements.

Stablecoin Framework Introduces Reserve and Approval Requirements

The new legislation establishes Taiwan‘s first regulatory framework specifically governing stablecoin issuers operating within the country’s financial system. Companies seeking to issue stablecoins must receive approval from both the Central Bank and the Financial Supervisory Commission before launch.

Approved stablecoin issuers must maintain sufficient reserve assets while conducting regular audits and publicly disclosing financial information supporting their operations. Reserve assets must also remain under qualified custodians to improve transparency and strengthen confidence in stablecoin issuance.

The law introduces tougher criminal penalties for operating virtual asset businesses or issuing stablecoins without the required regulatory approval. Violators could face prison sentences of up to seven years alongside fines reaching NT$100 million.

Authorities also increased penalties for cryptocurrency fraud and market manipulation under the newly approved legal framework across Taiwan’s digital asset sector. Individuals convicted of serious offenses could receive prison terms between three and ten years with fines ranging from NT$10 million to NT$200 million.

Additionally, lawmakers approved a supplementary resolution directing regulators to prepare proposals for virtual asset derivatives and related investment products within one year. The proposal aims to expand future investment opportunities while supporting the long-term development of Taiwan’s regulated cryptocurrency market.

The new framework also aligns Taiwan more closely with regulatory approaches adopted in several international markets while providing clearer rules for businesses. Industry participants will now prepare for the transition as regulators finalize implementation measures and supporting compliance requirements.