Legislative Yuan enacts licensing framework for virtual asset service providers
Taiwan’s Legislative Yuan passed comprehensive cryptocurrency and stablecoin regulations on Tuesday, establishing the country’s first licensing and supervision framework for virtual asset service providers (VASPs). The Financial Supervisory Commission (FSC) and the central bank will enforce the law once the executive branch publishes it.
The law regulates seven types of VASPs: exchanges, trading platforms, custodians, lenders, and three additional categories not specified in the legislation. All VASPs must obtain FSC approval to operate. Those with prior anti-money laundering registration have 12 months after the law takes effect to apply for a license.
Stablecoin issuers face dual approval requirements from both the central bank and the FSC. They must maintain sufficient reserves with a trustee and undergo regular audits. The FSC has one year from implementation to propose a regulatory plan for derivative crypto commodity services.
The law imposes strict penalties for violations. Operating a VASP or issuing a stablecoin without a license carries a maximum prison sentence of seven years and a fine up to 100 million New Taiwan dollars (approximately $3.1 million). Crypto fraud and price manipulation carry sentences of 3 to 10 years imprisonment, with fines ranging from 10 million to 200 million New Taiwan dollars ($300,000 to $6.3 million).
VASPs must comply with rules covering internal controls, audits, cybersecurity standards, crypto listing and delisting procedures, customer asset segregation, and financial reporting. The specific requirements for cybersecurity and financial disclosures have not been detailed.
“The FSC said the bill further strengthens the protection of traders’ rights and that issuing stablecoins will help Taiwan integrate with the international market and secure a place in the global crypto market,” according to a statement from the commission.
Taiwan joins Japan, Singapore, and Hong Kong in establishing comprehensive crypto regulations. The law takes effect only after publication by Taiwan’s executive branch; an implementation date has not yet been announced.
