Taiwan has passed its Virtual Asset Service Act, giving crypto exchanges and stablecoin issuers a clear licensing path after years of legal uncertainty.
Summary
- Taiwan’s new crypto law requires exchanges and other virtual asset firms to obtain FSC licenses.
- Stablecoin issuers must secure central bank and FSC approval while keeping full reserve backing.
- Existing registered crypto firms get a transition period before the new licensing system fully applies.
Taiwan’s Legislative Yuan passed the Virtual Asset Service Act in its third reading on June 30, sending the bill to President Lai Ching-te for the next step. The Financial Supervisory Commission said the law moves Taiwan’s crypto oversight from anti-money laundering registration to wider supervision of operations, market order and customer protection.
The act creates rules for seven types of virtual asset service providers, including exchanges, trading platforms, transfer firms, custodians, underwriters and lending service providers. The law covers internal controls, cybersecurity, asset listing reviews, customer asset segregation, outsourcing, civil liability and financial reporting, according to the FSC statement.
Taiwan sets new licensing rules for crypto firms
Under the new law, crypto businesses must obtain approval from the FSC before operating. Existing firms that already completed anti-money laundering registration before the law takes effect will have 12 months to apply for approval and 21 months to obtain the required license, according to the FSC.
The law also gives firms a limited buffer if more time is needed. The FSC said the transition period may be extended by three months, but only once. Firms that fail to complete the process by the deadline will not be allowed to continue virtual asset business in Taiwan.
Stablecoins get central bank role
Stablecoin issuers will need approval from both Taiwan’s central bank and the FSC before issuing tokens in the country. The law requires issuers to maintain full reserve assets, place reserves in trust and carry out regular audits and public disclosures, according to the FSC.
As previously reported by crypto.news, Taiwan’s FSC had earlier planned a draft law that would allow local banks to issue stablecoins tied to the New Taiwan dollar. That plan gave the central bank a role in stablecoin oversight and placed local stablecoin approval under the FSC.
The final law also creates criminal penalties for unlicensed activity and market abuse. Focus Taiwan reported that illegal VASP operations or stablecoin issuance can bring up to seven years in prison and fines of up to NT$100 million, or about $3.14 million.
Fraud and market manipulation carry heavier penalties. Offenders can face three to 10 years in prison and fines from NT$10 million to NT$200 million, according to Focus Taiwan.
New rules end legal gray area
The law gives Taiwan’s crypto sector a formal legal base after a period where many businesses relied on anti-money laundering registration rather than a full license. The legislative document said the act aims to protect customers, support sector development and bring Taiwan closer to global standards used in markets such as the European Union, Japan and South Korea.
Moreover, the FSC released the draft Virtual Asset Service Act in March 2025 with licensing rules for crypto firms, stablecoin standards and investor protection measures. The new passage turns that draft direction into a law awaiting promulgation and an effective date from the cabinet.
Previously, crypto.news reported that Taiwan’s central bank and FSC were pushing tighter stablecoin rules while lawmakers debated the government’s seized crypto holdings. That earlier debate showed how digital assets had moved from a narrow compliance issue into a wider policy topic in Taiwan.
The FSC said it will continue drafting authorized sub-rules and will consult industry groups and other stakeholders. The next stage will decide how licensing standards, personnel rules, internal controls and stablecoin procedures work in practice.
