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Taiwan's legislature gave final-reading approval to the Virtual Asset Service Act on June 30, establishing the island's first dedicated cryptocurrency statute and designating the Financial Supervisory Commission as sole regulator — a decisive shift from the light-touch anti-money-laundering registration framework that had governed the sector since 2021, Focus Taiwan reported.
The 56-article law upgrades virtual asset service providers from a registration-only regime to a full licensing system, treating exchanges, custodians and wallet operators as specially permitted businesses akin to banks or brokerages. Operators must secure separate licences across seven defined categories — exchange, trading platform, transfer, custody, underwriting, lending and others — meaning a single platform can no longer offer all services under one roof.
Eight incumbents that completed AML registration, among them MaiCoin, BitoGroup and XREX, receive a phased runway: they must file for a licence within 12 months of the law taking effect and complete review within 21 months, extendable by a further three months where necessary. New entrants face the full requirements from day one.
Stablecoins: reserve-back mandate, USDT reclassified as commodity
The law delivers Taiwan's first rulebook for stablecoins. Domestic issuance is gated three ways: only banks may issue, the token must be pegged solely to a fiat currency rather than a basket or other crypto assets, and issuers must hold full one-to-one reserves segregated from company funds and placed in trust. Algorithmic stablecoins are excluded. Regular audits are mandatory, and issuers are prohibited from paying interest to holders.
Foreign-issued stablecoins, including Tether (USDT) and USD Coin (USDC), are treated not as money but as a regulated commodity, requiring listing on a licensed local exchange with FSC approval. Offshore VASPs soliciting local users without a licence face enforcement under the new framework — a provision the Virtual Asset Service Provider Association flagged as a priority for its cross-domain anti-fraud agenda.
Enforcement: criminal provisions, prison terms up to 10 years
Penalties form the most tangible change for a market long shadowed by scams. The act explicitly criminalises false, fraudulent or concealed disclosure of information material to virtual asset issuance or trading, alongside direct or indirect manipulation of price, supply or demand. Violations carry three to ten years' imprisonment and fines of NT$10 million ($313,582) to NT$200 million. Operating an unlicensed VASP or issuing stablecoins without authorisation is punishable by up to seven years and a fine of up to NT$100 million.
Writing market manipulation, including pump-and-dump schemes, wash trading and insider dumping, into a dedicated criminal provision hands prosecutors a sharper instrument than the general fraud statutes previously applied, where proving intent often proved difficult.
Implementation timeline
The FSC must still draft roughly nine pieces of secondary legislation, targeted for completion by Q1 2027. The law itself is expected to take effect by early 2027. Lawmakers also adopted a nonbinding resolution requesting that the FSC submit a plan within one year to allow virtual asset firms to offer cryptocurrency derivatives.
International context
Taiwan's framework sits alongside the European Union's MiCA regime and the United States' GENIUS Act as part of a global convergence on crypto licensing and reserve-backed stablecoins. All three restrict foreign issuers: MiCA conditions third-country access on an EU passport, GENIUS requires foreign stablecoin issuers' home regimes to be deemed equivalent and to register with the OCC, while Taiwan demands offshore VASPs establish a local branch and secure FSC approval.
The VASP Association said it would work to align Taiwan with international standards through three committees handling listing review, discipline, and fraud prevention and compliance.
