The Legislative Yuan of Taiwan passed the third reading of the Virtual Asset Service Act on June 30, establishing the first comprehensive legal framework specifically regulating the digital asset industry in Taiwan. The virtual asset service industry is fully converted to a licensing system, and for the first time, a dedicated chapter management system is established for stablecoins. The Financial Supervisory Commission (FSC) is officially designated as the competent authority, responsible for issuing licenses, supervision, and formulating supporting sub-laws. Before the passage of the new law, Taiwan mainly managed virtual asset service providers based on the Money Laundering Control Act and executive orders.
Core Requirements of the VASP Licensing System
According to the new law, any service provider offering virtual asset trading, custody, exchange, transfer, brokerage, and other related services must obtain approval from the FSC before operating. Service providers must comply with the following regulations:
Internal Control and Risk Management: Establish comprehensive internal control systems and risk management mechanisms
Information Disclosure: Fulfill information disclosure obligations as required
Segregation and Custody of Client Assets: Implement segregation of client assets from the company's own property
Information Security Management: Establish a qualified information security management system
Anti-Money Laundering (AML): Establish anti-money laundering and counter-terrorist financing systems as required
Unauthorized operation without a license will result in administrative penalties; severe cases may also involve criminal liability.
Stablecoin Special Chapter: Taiwan's First Regulatory Framework for Issuers
The Virtual Asset Service Act for the first time establishes a special chapter for stablecoins, specifying the following obligations:
· Stablecoin issuers must obtain FSC approval and maintain full reserve assets;
· Reserve assets must be segregated from the company's own property to protect holders' rights.
Business involving New Taiwan Dollar stablecoins is also subject to the supervision of the Central Bank (CBC). The reserve asset ratio, issuance cap, and specific application procedures will be stipulated in subsequent sub-laws.
Market Order Regulations: New Prohibited Acts and Dual Administrative and Criminal Liability
The new law adds market order regulations, explicitly prohibiting false trading, price manipulation, dissemination of false information, insider trading, and other acts that may affect market fairness. Violators will face both administrative penalties and criminal liability, providing the FSC with a more complete enforcement basis.
Known Scope of Subsequent Sub-laws
The FSC will successively formulate supporting sub-laws based on the parent law. According to publicly available information, the sub-laws will cover the following: application qualifications and review procedures, minimum capital requirements, information disclosure standards, client asset custody standards, and other regulatory requirements.
Transition mechanisms for existing VASP providers and the specific timeline for license applications have not yet been officially announced as of the third reading on June 30, 2026.
Frequently Asked Questions
How did Taiwan regulate virtual asset service providers before the new law?
Before the new law, Taiwan mainly required VASPs to complete anti-money laundering registration based on the Money Laundering Control Act and executive orders, lacking a comprehensive financial regulatory framework. The new law upgrades the regulatory system from a registration system to a licensing system, making the FSC the statutory competent authority and providing a more complete enforcement basis.
What are the specific provisions of the Virtual Asset Service Act regarding stablecoin issuance?
The new law requires stablecoin issuers to obtain FSC approval, maintain full reserve assets, and segregate reserve assets from company property. Business involving New Taiwan Dollar stablecoins is also subject to supervision by the Central Bank (CBC). Details such as the reserve asset ratio, issuance cap, and application process will be stipulated in subsequent sub-laws.
When will the transition arrangements for existing VASP providers be announced?
As of the third reading on June 30, 2026, the FSC has not yet announced transition mechanisms or the license application timeline for existing VASP providers. Relevant arrangements will be clarified during the FSC's process of formulating supporting sub-laws; only after the sub-laws are published can providers apply for licenses based on the specific regulations.
