Bitcoin Magazine

Taiwan Passes Crucial Crypto Law With Licensing Rules, Stablecoin Framework

Taiwan’s Legislative Yuan approved the Virtual Asset Service Act in its third reading on Tuesday, the island’s first comprehensive framework for the crypto sector. Lawmakers sent the bill to President Lai Ching-te, who is expected to sign it into law within ten days.

The act establishes a licensing regime for all virtual asset service providers in Taiwan and hands broad oversight to the Financial Supervisory Commission (FSC). Under the law, crypto businesses must secure FSC approval before operating in Taiwan. The framework covers seven categories of providers, including exchanges, trading platforms, transfer firms, custodians, underwriters and lending services.

The legislation creates Taiwan’s first stablecoin framework. Issuers must win approval from both the central bank and the FSC before releasing tokens. The law requires them to hold full reserves, place those reserves in trust, and submit to routine audits and public disclosures. 

Domestic stablecoin issuance is restricted to banks, a measure that ties the emerging asset class to the country’s established financial institutions.

7 years in prison for breaking the rules

Penalties for breaking the rules are steep. Operating an unlicensed virtual asset service, or issuing a stablecoin without approval, can bring up to seven years in prison and fines that reach NT$100 million ($3.14 million). 

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

To ease the shift, the FSC set a transition window for firms that completed anti-money laundering registration before the law takes effect. Those companies get twelve months to file license applications and up to twenty-one months to obtain full approval. The FSC said it can extend the window by three months, a one-time option.

The vote positions Taiwan among a growing list of jurisdictions moving from patchwork guidance to a single statute. Kenya and Ghana signed virtual asset laws in recent months, and lawmakers across Asia continue to draft rules for exchanges and stablecoin issuers. 

Taiwan’s approach pairs an open door for licensed operators with some of the region’s harsher criminal penalties, a balance regulators framed as a bid to protect investors without stifling the industry.

Taiwan’s embrace of bitcoin and crypto

The passage builds on a broader shift in Taiwan’s stance toward digital assets. The government has disclosed holdings of 210 bitcoin valued near $18 million, and officials have floated plans to launch a strategic bitcoin reserve and study broader BTC regulation.

The new act gives that ambition a legal foundation, defining who may operate, under what conditions, and with what consequences for those who ignore the rules.

Source: BitcoinMagazine