TAIPEI (Taiwan News) — The legislature on Tuesday passed the third reading of the Virtual Asset Service Provider Act, establishing the country's first comprehensive legal framework governing cryptocurrency businesses and stablecoin issuers.
The bill introduces mandatory licensing requirements for virtual asset service providers (VASPs) and stablecoin issuers, while imposing stricter penalties for fraud, market manipulation, and other unfair trading practices. The Financial Supervisory Commission said passage of the bill will introduce comprehensive protections, per a press release.
New requirements will include more oversight of VASPs, extending beyond existing anti-money laundering requirements, and will separate services into seven categories: exchanges, trading platforms, transfer services, custodians, underwriters, lenders, and other designated services.
Licensed operators will be subject to regulations governing internal control and audit systems, cybersecurity management, virtual asset listing and delisting procedures, segregation of customer assets, civil liability, and financial reporting.
The bill also creates Taiwan's first licensing regime for stablecoins, defined as virtual assets linked to one or more fiat currencies to maintain price stability. Under the new regulations, entities seeking to issue stablecoins in Taiwan must first obtain the Central Bank's consent and the FSC's approval.
Stablecoin issuers must maintain sufficient reserve assets, place assets in trust with qualified custodians, conduct regular audits, and publicly disclose relevant financial information. The bill prohibits unfair market practices and price manipulation, with violators facing prison sentences ranging from three to 10 years and fines of between NT$10 million (US$340,000) and NT$200 million, per the press release.
Anyone operating a virtual asset business or issuing stablecoins without the required license may face up to seven years in prison and fines of up to NT$100 million. The law will take effect after it is promulgated by the Cabinet.
The FSC said a legal framework for stablecoin issuance will help Taiwan align with international regulatory standards (EU, Japan, and South Korea). Dedicated legislation regulating VASPs and stablecoins will strengthen Taiwan's position in the global digital asset market.
Lawmakers also approved a supplementary resolution directing the FSC to submit, within one year, a proposal outlining how Taiwan's virtual asset industry could offer derivative virtual asset products and related services. The measure aims to expand investment options while supporting the industry's long-term development, per CNA.
