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Key Takeaways
- Taiwan’s Legislative Yuan passed the Virtual Asset Service Act, requiring all crypto platforms to obtain FSC licensing.
- Stablecoin issuers must secure central bank and FSC approval and maintain 100% asset reserves.
- Violations carry criminal penalties, including prison terms up to ten years and fines up to NT$200 million.
Taiwan’s Legislative Yuan approved the Virtual Asset Service Act in its third reading on Tuesday, sending the bill to President Lai Ching-te for signing. The law requires all virtual asset service providers to obtain licenses from the Financial Supervisory Commission and sets stricter custody, governance, and reserve standards for the industry.
Bill Moves to Presidential Signature, Not Yet in Effect
The Legislative Yuan’s approval marks the final legislative step before the bill becomes law. President Lai is expected to sign it within the next 10 days. Once signed, the Executive Yuan will set the official date the rules take effect, meaning implementation has not yet begun.
The act replaces Taiwan’s current framework, under which crypto businesses only had to register for anti-money laundering compliance. It introduces a formal licensing regime overseen by the FSC, covering exchanges and other virtual asset platforms operating in the country.
Licensing, Custody, and Governance Requirements
Under the new law, virtual asset service providers must secure explicit FSC licensing before operating legally in Taiwan. The legislation adds requirements around cybersecurity protections, segregation of customer funds from company assets, and internal risk management and governance controls.
Platforms already registered under the existing anti-money laundering regime get a 12-month grace period to file license applications. They have up to 21 months in total to secure full FSC approval and any other permits required under the act.
Stablecoin Issuers Face Additional Oversight
The act sets a higher bar for stablecoin issuers specifically. Companies operating stablecoin businesses must obtain approval from both Taiwan’s central bank and the FSC, and are required to maintain 100% asset reserves at all times.
Stablecoins are digital assets whose value is pegged to an external reference, such as the U.S. dollar or another national currency. The Bank for International Settlements has flagged foreign-exchange risk tied to dollar-pegged stablecoins generally.
Penalties Include Prison Terms and Fines Up to NT$200 Million
The law introduces criminal penalties for violations. Operating a crypto platform or stablecoin service without authorization could carry a prison sentence of up to seven years and fines of up to NT$100 million, or roughly $3.14 million.
Market fraud and price manipulation offenses carry steeper sanctions: prison terms ranging from three to ten years and fines between NT$10 million and NT$200 million. The penalty structure differs depending on whether the violation involves unlicensed operation or direct market abuse.
FSC and Central Bank to Oversee New Framework
The act represents a change in regulatory approach for Taiwan, moving from baseline anti-money laundering registration toward comprehensive supervision covering licensing, custody, governance, and market conduct. The FSC will administer the licensing process once the law takes effect, while the central bank takes on a direct approval role for stablecoin issuers.
The extended transition window, up to 21 months for existing platforms, allows currently registered businesses to meet the new licensing standards before the full framework takes effect.
