Taiwan passed a comprehensive crypto regulation bill requiring licensing and strict oversight by the Financial Supervisory Commission

Taiwan’s legislative body has approved a sweeping set of regulations for the digital asset sector. The Legislative Yuan passed the Virtual Asset Service Act in its third reading, sending it to President Lai Ching-te for final approval, with the formal signature expected within the next ten days.

Broader licensing and operational requirements introduced

Once enacted, all virtual asset service providers operating in Taiwan will be required to obtain an explicit license from the Financial Supervisory Commission. This mandate covers cryptocurrency exchanges and other trading platforms. The Financial Supervisory Commission stands as the primary authority regulating Taiwan’s financial sector, including banks and capital markets.

The new framework extends beyond simple licensing. It calls for enhanced cybersecurity protocols, segregation of client assets from company funds, and the adoption of stricter internal governance and risk management standards. These measures signal a significant shift from Taiwan’s previous focus on anti-money laundering compliance, expanding to a far-reaching regulatory oversight regime.

Transitional period and stablecoin requirements

A transitional grace period will be granted to currently registered platforms under Taiwan’s anti-money laundering rules. These companies will have twelve months to submit licensing applications and up to twenty-one months to secure full approval along with all necessary permits. Previously, crypto company obligations were largely limited to anti-money laundering registration.

A more stringent approach has been adopted for stablecoins. Entities operating in this sector must secure approvals from both the central bank and the Financial Supervisory Commission. An additional requirement mandates that stablecoins maintain full 100% reserve backing at all times.

Mini glossary: A stablecoin is a type of cryptocurrency that aims to keep its value pegged to an external reference such as the US dollar or another fiat currency. The Bank for International Settlements had previously warned that stablecoins pegged to the dollar may pose exchange rate risks.

Severe penalties outlined for violations

The legislation introduces tough sanctions for regulatory breaches. Anyone offering crypto platforms or stablecoin services without authorization could face up to seven years in prison and fines of up to 100 million Taiwan dollars, approximately $3.14 million.

Penalties rise in cases of market fraud or price manipulation, with prison sentences ranging from three to ten years and fines between 10 million and 200 million Taiwan dollars.

The Executive Yuan will determine the law’s official implementation date following presidential approval. With this milestone, Taiwan’s crypto industry is set to transition from basic compliance obligations to comprehensive regulatory oversight.

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