Taiwan Passes First Crypto Law With 7-Year Prison Penalty

Legislative Yuan approves Virtual Asset Service Act, establishing licensing regime and stablecoin rules

Taiwan’s Legislative Yuan approved the Virtual Asset Service Act on July 1, 2026, marking the island’s first comprehensive cryptocurrency regulation. The law creates a licensing framework for virtual asset service providers, establishes rules for stablecoin issuance, and imposes criminal penalties of up to seven years imprisonment for unlicensed operations.

The Financial Supervisory Commission (FSC) will oversee the licensing regime. Seven categories of virtual asset service providers are covered by the law: exchanges, trading platforms, transfer firms, custodians, underwriters, and lending services. Firms operating without a license face maximum fines of NT$100 million (approximately $3.14 million) in addition to prison sentences.

Stablecoin issuers face stricter requirements. Both Taiwan’s central bank and the FSC must approve any stablecoin offering. Issuers must hold full reserves in trust, undergo routine audits, and make public disclosures. Domestic stablecoin issuance is restricted to banks, according to the law’s provisions.

President Lai Ching-te is expected to sign the legislation within ten days of the Legislative Yuan’s approval. Once signed, firms that completed anti-money laundering registration before the law takes effect will receive a transition window. License applications must be submitted within 12 months of the law taking effect, with full approval expected within 21 months. An optional one-time extension of up to three months is available.

Fraud and market manipulation carry sentences ranging from three to ten years, with fines between NT$10 million and NT$200 million ($314,000 to $6.28 million).

Bitcoin Magazine marked the passage with a social media post: “We’re officially entering a new era of digital finance.” Taiwan joins Kenya and Ghana in recently enacting virtual asset legislation.

The Taiwan government holds 210 bitcoin, valued near $18 million, and has previously floated plans for a strategic bitcoin reserve.