Taiwan enacts first cryptocurrency law: FSC to regulate
Taiwan’s legislature has approved the Virtual Asset Service Act, the island’s first dedicated cryptocurrency law. The measure requires all Virtual Asset Service Providers (VASPs) to obtain a licence from the Financial Supervisory Commission (FSC) before operating.
This milestone law places Taiwan among Asia’s stricter crypto regimes as it aligns with Japan and the EU on asset segregation and stablecoin rules. It even goes further than Hong Kong and South Korea in licencing requirements and penalties. While its stablecoin provision mirrors that of the U.S. GENIUS Act, the island’s penalties are particularly more stringent.
Licencing framework
The Act replaces the previous registration system under the Anti-Money Laundering Act, last amended in 2024, with a stricter prior-approval regime.
The FSC is now the sole regulator for cryptocurrency, responsible for licencing, supervision, and enforcement. Oversight shifts from light-touch AML registration to a banking-style framework, aimed at investor protection, market stability, and global compliance.
VASPs must secure separate licences from exchanges, trading platforms, transfers, custody, underwriting, and lending for each business type. Traditional financial institutions may also apply, broadening the pool of regulated operators. Yet the law has established a clear purpose: to protect investors, strengthen oversight, and balance innovation with consumer safeguards.
Stablecoin oversight
A dedicated chapter addresses stablecoins. This includes the requirement that issuers secure FSC approval, granted only after consultation with the central bank. They are also required to hold full reserve assets at domestic financial institutions, segregated from company funds, and placed in trust. Additionally, stablecoins cannot pay interest or yield. Holders gain priority claims on reserves if issuers default.
While investor protection advocates welcome these safeguards, industry leaders view stablecoin issuance and custody as areas for collaboration. Smaller operators, however, are faced with compliance costs and the risk of strict penalties.
Tougher penalties
Sanctions have been significantly strengthened. For one, operating without a licence can result in up to seven years’ imprisonment and fines of TWD100 million ($3.1 million), compared to the previous maximum of two years and TWD5 million.
Moreover, fraud or market manipulation carries a sentence of three to ten years in prison and fines ranging from TWD10 million to TWD200 million ($310,000–$6.2 million). These measures signal Taiwan’s shift from a “light-touch” model to one of Asia’s most stringent crypto regimes.
Transition timeline
Once the law takes effect, registered operators must apply to secure a licence within the same period. According to FSC, it is mandated to finalise sub-regulations by Q1 2027, assuring clarity for implementation. Since Taiwan’s framework aligns with the FATF’s recommendation on anti-money laundering and terrorist financing, it positions itself as a credible fintech hub.
Today, crypto regulation has shifted globally from policy drafting to full implementation. Stablecoin oversight, custody rules, and disclosure systems are now functioning across multiple jurisdictions. This is exemplified by organisations such as the FATF, OECD, and Basel Committee, which are converging, though enforcement intensity still varies by region, according to various reports.
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