Taiwan Passes First Comprehensive Virtual Asset Law, With Mandatory VASP Licensing and Stablecoin Rules

Taiwan has passed the Virtual Asset Service Act, creating its first full regulatory framework for virtual asset service providers and stablecoins. For PSPs, exchanges, custodians, and banking partners, the important part is simple: the country is moving from AML-only oversight to a licensing regime with operating rules, reserve requirements, and criminal penalties.

1. All virtual asset service providers (VASPs) will need approval from Taiwan’s Financial Supervisory Commission (FSC) before starting operations. The law covers 7 categories of businesses: crypto exchanges, trading platforms, custodians, transfer service providers, underwriters, lending service providers, and other virtual asset service providers.
2. The new framework goes beyond registration and into day-to-day controls. It sets requirements for financial reporting, internal controls and audits, cybersecurity, fitness and propriety standards for executives and personnel, segregation of customer assets, and listing procedures for virtual assets.
3. Stablecoins may be issued in Taiwan only with approval from the Central Bank and a license from the FSC. Issuers must maintain full (100%) reserve backing, keep reserves at domestic financial institutions, place those reserves in trust, and submit to regular audits and public disclosures.
4. The reserve mechanics are unusually explicit. Reserve assets must be fully segregated from an issuer’s own assets, cannot become part of the bankruptcy estate if the issuer fails, and stablecoin holders get priority claims over them. Issuers are also barred from paying interest or any other form of yield on issued stablecoins.
5. Penalties are not symbolic. Taiwan’s Central News Agency (CNA) reported that fraud, dissemination of false information, and market manipulation are punishable by 3 to 10 years in prison and fines from NT$10 million to NT$200 million. Operating a virtual asset business or issuing stablecoins without the required license carries up to 7 years in prison and fines of up to NT$100 million.

There is also a transition period for firms already registered under Taiwan’s anti-money laundering framework. Once the law takes effect, those companies will have 12 months to apply for a license and 21 months to obtain regulatory approval and receive a license; the deadline may be extended once by up to 3 additional months. The effective date itself will be set later by Taiwan’s Executive Yuan.